Petition — General Warehousemen & Helpers Local 767 v. Standard Brands, Inc.

| FILED

;4

If Supreme Coust, U. a |

FEB 21 1979S!

: 5 a) he Sd

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1978

GENERAL WAREHOUSEMEN AND HELPERS LOCAL 767, Affiliated With the

INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS,

WAREHOUSEMEN AND HELPERS OF AMERICA,

Petitioner,

VS.

STANDARD BRANDS, INC.,

Respondent.

PETITION FOR WRIT OF CERTIORARI

To the United States Court of Appeals

for the Fifth Circuit

DAVID PREVIANT

6th Floor, Midland Bank Building

211 West Wisconsin Avenue

Milwaukee, Wisconsin 53203

L.N.D. WELLS, JR.

G. WILLIAM BAAB

8204 Elmbrook Drive, Suite 200

Dallas, Texas 75247

214/620-3672

Attorneys for Petitioner

MULLINAX, WELLS, BAAB, CLOUTMAN

& CHAPMAN, P.C.

Of Counsel

January, 1979

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

a

INDEX

Page

eee aaa e sk osha en es ek ec recosee 1

Sec hea Aide ab be Ges 564 ces vecdceses 2

EE Ee 2

oo” Eee ae 3

Cc Gb becerscccccccccsseccss 4

Reasons for Granting the Writ ................22005. 12

eae ab ae ken 06> o's 2 id 19

CCE SCs ace e Nh 6 pebachcesesuecce A-1 to A-109

INDEX TO APPENDIX

Arbitrator’s Opinion and Award, (9/20/75) .......... A-1

District Court’s Findings of Fact (10/16/75) .......... A-46

SN UE ROP TED occ cesses sccesens A-50

we TS le ae A-51

CER C ewe b oes 6.06664 vb es coeses A-54

Opinion of Court of Appeals—Reversing District Court

(10/11/77); 560 F.2d 700 Dissent 560 F.2d at — ... .A-55

En Banc Opinion of Court of Appeals (9/15/78), — F.2d

EE a De cdc ccc ces secccessceees A-75

Order denying Rehearing (12/28/78) ............... A-104

ee tad beh bee's ess ov ssecseces’s A-105

NLRB General Counsel’s Memorandum re IAM With-

drawal of Charge, 1976-77 CCH NLRB 420,020 at p.

RES Se ae A-105

Cases Cited

Carey v. Westinghouse, 375 U.S. 261 (1964), 11 L.Ed.

EN is bk 46 5 WRN EV eV on AMEE TAR IANS CRETE WOES 16

Statutes Cited

BE Ss Eh REED NSS weed udeeeeureeescedeose's 2

Oe a ek re ere rire 10, 19

SE EE Deas ov Ga deecidseveangeuiexsats 3

fa | eee eee EERE ORT eee 3

Be Reece S BOD OP GIG bv cecv tease reccewveess 4,10

Other Authorities

“Business Loves the Sunbelt (and Vice Versa)” Fortune,

SUD IF Fs OR. TIRES oc eve vcicevccseccesecs 13

Committee on Education and Labor, House of Represent-

atives, on H.R. 76, the National Employment Priorities

Ast, Aipeh, Gile, BEte D, WGTS. i vk ccccsccenctees 14

Dallas Times Herald, January 21, 1979 .............. 14

“Employees' on Manufacturing Payrolls, by Region and

State, 1967-75,” Handbook of Labor Statistics ........ 14

Hearing before the Subcommittee on Labor Standards on

the National Employment Priorities Act at p. 73 ..... 12

Maurice Fulton, New Factors in Plant Location, 49 Harv.

Bus.Rev. 4, 5-6 (May-June 1971) ............005. 14, 15

“Plant Relocation: Catching Up With the Runaway Shop,”

XIV Boston College Law Rev. 1135-1169 (1973) ....12, 18

Rifkin & Barber, The North Will Rise Again, Beacon

me ET rer ers Te eee eee 12

Scheinkman, “Plant Removal Under the National Labor

Relations Act,” 16 NYU Conf.Lab. 81 (1962) ......

The Law of Contracts, Baker Voorhis & Co., New York,

ee we eehae

“The Second War Between The States, Bitter Struggle for

Jobs, Capital, and People,” Business Week, May 17,

a PRE SA Piet a oe a TO oe ae

18

17

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1978

rere

GENERAL WAREHOUSEMEN AND HELPERS LOCAL 767, Affiliated With the

INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS,

WAREHOUSEMEN AND HELPERS OF AMERICA,

Petitioner,

VS.

STANDARD BRANDS, INC.,

Respondent.

PETITION FOR WRIT OF CERTIORARI

To the United States Court of Appeals

for the Fifth Circuit

Petitioner, General Warehousemen and Helpers Local 767,

affiliated with International Brotherhood of Teamsters, Chauf-

feurs, Warehousemen and Helpers of America (“Teamsters”),

respectfully prays that a writ of certiorari issue to review the

judgment and opinion of the United States Court of Appeals

for the Fifth Circuit entered in this proceeding on September

15, 1978.

OPINIONS BELOW

The findings, opinion and award of the arbitrator, Professor

Charles J. Morris, are unreported. They are reproduced in the

Appendix at p. A-1 through p. A-45. ws

aoe. enn

The unreported findings, conclusions, and order of the

United States District Court for the Northern District of Texas,

denying enforcement of the arbitral award are reproduced in

the Appendix at p. A-46 through p. A-53.

The original opinion of the Court of Appeals for the Fifth

Circuit, rendered October 11, 1977, enforcing the arbitral award

is reported at 560 F.2d 700. It is reproduced in the Appendix

at p. A-55 through p. A-70. The dissent appears at p. A-70

through p. A-73.

The en banc opinion of the Court of Appeals for the Fifth

Circuit, rendered September 15, 1978, affirming the District

Court’s denial of enforcement of the arbitral award, and re-

manding to the District Court, is as yet unreported. It is re-

produced in the Appendix, Majority Opinion p. A-75 to p. A-99;

Dissent p. A-99 to p. A-103.

JURISDICTION

The order of the Court of Appeals for the Fifth Circuit

refusing Petitioner's Motion for Rehearing was entered Decem-

ber 28, 1978, and this petition for certiorari is being filed

within ninety (90) days of that date. This Court’s jurisdiction

is invoked under 28 U.S.C. § 1254(1).

QUESTIONS PRESENTED

This case presents questions as to the availability of specific

performance to enforce an arbitral award requiring an employer

to permit employees to transfer to a new plant at established

wages without loss of seniority.

The specific questions are:

1. May an employer who violates a collective bargaining

agreement (which provides that covered employees may follow

ey es

their work to a new plant) avoid specific performance of the

collective bargaining agreement by contracting with another

union at substandard wages and conditions to cover the work

at the new plant?

2. Does the arbitral award unlawfully infringe upon the

self-organization rights of the employees at the new plant to

the extent that the award must be denied specific enforcement,

either:

(a) as in conflict with the agreement between the em-

ployer and another union, executed during the pendency of

the arbitration, and providing lesser wages and conditions

at the new plant? or,

(b) as in conflict with NLRB certification of the other

union, based upon an election at which only the new

employees were allowed to vote?

3. Did the Court of Appeals err in limiting damages to those

incurred during the contract term; and in refusing specific per-

formance when the IAM contract and certification terminated?

STATUTORY PROVISIONS INVOLVED

Pertinent provisions of the Labor Management Relations Act

of 1947, as amended, are:

29 U.S.C. § 173(d) which declares a national policy that:

“(d) Final adjustment by a method agreed upon by the parties

is declared to be the desirable method for settlement of grievance

disputes arising over the application or interpretation of an

existing collective bargaining agreement.”

29 U.S.C. § 174 “. . . employers and employees and their

representatives in any industry affecting commerce shall—(1)

exert every reasonable effort to make and maintain agreements

concerning rates of pay, hours and working conditions . . .”

or ce

29 U.S.C. § 185 (a) and (c), set out in the Appendix, (p.

A-105) provides federal jurisdiction of suits for violation of

contracts between an employer and a labor organization.

STATEMENT OF THE CASE

This action was brought under §301(a) of the Labor Man-

agement Relations Act (29 U.S.C. §185(a)), by Petitioner

(herein “Teamsters”) to enforce a labor arbitration award

against Standard Brands, an employer, party to a Dallas, Texas,

collective bargaining agreement. The arbitration process was,

as the courts below found, “regular and has been pursued in

accordance with the provisions of a collective bargaining agree-

ment.”!

The arbitration findings and award (App. pp. A-1-A-45) con-

cern the opening of a new Standard Brands margarine plant in

Denison, Texas, and the closing of an existing margarine plant in

Dallas, Texas. The Dallas plant had long been represented by

Teamsters, and the collective bargaining contract there, as the

Court of Appeals found, contained provisions protecting the

rights of the employees if the Dallas operations should be

“transferred permanently to a new plant. . .”.

Standard determined, prior to 1974, to build a new plant in

Denison, some 75 miles from Dallas. When Dallas employees,

uneasy that their jobs were in jeopardy, sought assurance that

Standard would not eliminate Dallas jobs or transfer Dallas

operations to Denison, they were repeatedly assured that the

Dallas operations would not be affected. Actually, Standard

then intended to—and later did—close the Dailas plant. With-

out detailing all that is found in the arbitrator’s lengthy deci-

1 The pertinent provisions of the Dallas collective bargaining

agreement are set out in the arbitrator’s decision at pp. 3 to 8 of the

Appendix to this Petition. See footnote 1 to the majority decision,

en banc, below, App pp. 77 to 78, infra.

inh ais

sion (App. p. A-1 to p. A-45) it is clear (as the arbitrator found

and as the courts below accept?) that Standard “intended to

operate Denison non-union, and it especially tried to operate

it without the Teamsters Union and its contract.”*

The Denison plant opened in the fall of 1974. Teainsters’

written request for transfer rights as provided in the Dallas

contract was ignored; Teamsters filed a grievance which as-

serted that the operation of the new plant would result in

the closing of the old one—and requested, in that event, the

protection of the Dallas employees as provided in their con-

tract.*

The Dallas plant actually closed October 1, 1975. Mean-

while, the Teamsters’ grievance, denied by Standard Brands,

was submitted to the arbitrator, who after two hearings and

a plant inspection, issued the opinion and award which is the

subject of this litigation (App. 1-54).

The arbitrator found that Standard had engaged in a series

of specified violations of the Dallas collective bargaining agree-

ment, that Standard’s actions had been designed to assure op-

eration of the Denison plant “non-union” and had resulted in

“discrimination against the Dallas employees because of their

Teamsters Union membership.”

The arbitrator further specifically found Standard to have

violated that section of the collective bargaining agreement

which had assured the Dallas employees the right to fill jobs

at the Denison plant.®

2 App. p. 41, infra; 560 F.2d 701 (Sth Cir. 1977).

* Arbitrator’s Opinion, App. p. 42, infra.

* See contract provisions displayed in the arbitrator’s Opinion,

App. pp. 3-8, infra.

® See Arbitrator’s Opinion, App. pp. 41 to 42, infra.

parte yee

While the Teamsters’ claim was pending in arbitration Stand-

ard agreed with another union (IAM), over Teamsters’ objec-

tion, for NLRB to conduct an election at Denison. The elec-

tion agreement permitted only the newly hired Denison

employees to vote.

IAM won the election,® was certified by NLRB, and in less

than a month fror: the certification Standard had signed a

contract with IAM covering the Denison plant providing wage

rates “significantly lower than comparable rates in the Dallas

Teamsters agreement.”*

Having found gross violation of the Teamsters collective bar-

gaining agreement, the arbitrator sought to remedy the viola-

tions, and at the same time not to intrude upon the rights of

the newly hired Denison employees. The arbitrator accordingly

wrote; App. p. 42, infra:

What is an appropriate remedy? I have tried to balance

the contract rights of the Dallas employees with the in-

terest of the present Denison employees who are wholly

innocent in this proceeding. Had the Company not vio-

lated the agreement initially, the Teamster’s Union, prob-

ably under the same contract, would most likely be the

bargaining representative of the Denison employees, who

would. have been mostly former Dallas employees—the

record indicates that most of them would have accepted

transfer. I will not so order, however. Nor will I order

the Company to displace any present employee. As well

as violating other provisions, the Company did violate the

contractual counterpart of Section 8(a)(3) of the National

Labor Relations Act, for which affected employees would

6 Standard advised NLRB in late 1974 that “the Denison plant

is fully staffed,” although it only had 26 employees there, and several

major manufacturing lines were yet to be started up. Arbitrator’s

Opinion, App. p. 36, infra.

* Arbitrator’s Opinion, App. p. 37, infra.

a. oa

be entitled to be made whole as to their losses. So far,

however, there have been no losses; what we are con-

cerned with are future rights and the avoiding of losses.

Accordingly, subject to the limitations noted below, I hold

that all Dallas employees who desire to transfer may do

so and that they will acquire new seniority based upon

the first working day at the Denison plant (a day in late

October, 1974, as described hereinabove), and their rela-

tive same seniority date) will be based upon length of

service with the Company. The Company will be required

to provide suitable employment at the Denison plant, be-

ginning the first regular work day following the termina-

tion of their employment at the Dallas plant, to as many

of those Dallas transferees as are required for the opera-

tion of stick or bulk margarine operations,[*) provided,

however, that such operation shall include at least two

lines using Benhil equipment or the equivalent. If ad-

ditional operations are added, such as Morpak lines, with

or without whipped or bulk margarine production, any

Dallas employees not otherwise assigned will be assigned

to these jobs before employment is offered to anyone else.

And if vacancies o.cur in other production or maintenance

jobs at the Denison plants, such jobs are to be filled by

Dallas transferees, so long as they are available and quali-

fied to do the work. If there are any persons from the

Dallas plant desiring to transfer in excess of those required

for the aforesaid jobs, such persons shall be placed on a

preferential hiring list and shall have the rights of em-

ployees on permanent layoff under the contract herein.

It is recognized that the addition of these several manu-

facturing lines and newly transferred employees will ma-

terially alter the bargaining unit at Denison and that

% As made clear earlier in the arbitral decision, Dallas employees

had been manufacturing stick and bulk margarine. (Arbitrator’s

Opinion, App. p. 11, infra).

eventually the NLRB will have to determine the resulting

questions concerning representation. Until that time, how-

ever, the provisions of the present Teamsters contract will

govern the compensation and other benefits of the em-

ployees performing work of the same nature as the Dallas

operations. Such contract, however, will not govern any

other job in the plant even though such job may be filled

by a Dallas transferree, for such job would legically be

covered by the IAM contract.

The parties are further required to appoint their represent-

atives under Part I, Section (j) as promptly as possible

for the purpose of implementing transfer and related

rights provided by Section 13, as interpreted by this

Award. I shall retain jurisdiction over the parties and

subject matter of this grievance pending compliance with

this award.

IAM challenged the transfer and seniority provisions of the

award by charges before NLRB. Prior to trial of the charges

IAM withdrew them. The withdrawal was with the consent of

the General Counsel of NLRB, recorded in an opinion pub-

lished at 1966-67 CCH NLRB 4 20,020 at p. 32,030 App.

pp. 105-109, infra.

Teamsters filed this action to enforce the award, the Dis-

trict Court denied enforcement on the ground “that the arbi-

trator exceeded the scope of his authority since his award is in

conflict with the NLRB’s certification of the LAM in Denison.”®

The majority of the Fifth Circuit panel which first heard the

appeal (Judges Tuttle and Wisdom) noted that the “arbitration

decision has passed one test before the NLRB,” in that [AM’s

challenge by unfair labor practice charge of the propriety of

“bumping” Denison empioyees by transfer from Dallas was

% App. p. 47, infra.

=—

withdrawn—with formal opinion from the NLRB General

Counsel (560 F.2d 704, App. p. 62, infra) which the Court

noted, viz:

“The NLRB Division of Advice concluded that the Ma-

chinists should be permitted to withdraw the charge. One

basis for the Division of Advice’s reaction was the Ma-

chinists’ desire to drop the matter. But the Division also

commented that “the Employer’s actions in transferring a

Dallas employee to Dennison [sic] and applying Dallas

seniority to him were considered to have been in compli-

ance with, and therefore privileged by the arbitration

award .. .”1°

Judge Coleman, in dissent, 560 F.2d 709, App. p. 70, infra,

said that the “true issue is whether the District Court abused its

discretion when it denied enforcement”; he viewed the Union's

10 The majority opinion of the Circuit Court panel goes on to ob-

serve at 560 F.2d 704, App. p. 62, infra:

“The same NLRB memorandum, however, appears to question

the propriety of the award’s extension of Dallas contract terms

to Denison. The memorandum only approved of the award ‘as

modified’—an apparent reference to the decision by the district

court not to enforce the application of the Teamster contract at

Denison. Moreover, the Division comment that

‘If the Circuit Court is being asked by the Teamsters to apply

other provisions of the Teamster contract to the Denison em-

ployees so that the Machinists’ certification rights would be

undermined, the Machinists may wish to seek Board interven-

tion. Such a request would be forwarded to the Division of

Litigation.’

Id., at n.8.

Had the Board appeared in our case, its views would have re-

ceived careful consideration . . . It is one thing for a court to

refuse to enforce an arbitration award when the NLRB protests

that enforcement would impair Board processes. It is another

to ‘protect’ the Board’s processes when no unfair labor practice

charge is presently pending and no request for a stay of enforce-

ment has been heard from the Board.

== 10 —

actions as “merely attempts to subvert the NLRB order” (sic)"?

regarding “the proper bargaining unit”'*; and he urged that

effectuation of the award “would result in an unfair labor prac-

tice in violation of §158(a)(1,3) of the National Labor Manage-

ment Rel<*‘ons Act.” (App. p. 72).

Standard’s Motion for Rehearing en banc was granted, and

on rehearing the majority, now speaking through Judge Cole-

man, the original dissenter, held:

“|. that the remedy prescribed by the arbitrator re-

quired the employer to violate the terms of another of its

collective bargaining agreements with a bargaining unit'**

duly certified by the National Labor Relations Board.”

(App. p. 76 emphasis added).

The en banc majority stated the issue (erroneously, in our

view) at App. p. 89, infra:

“

. whether a federal district court can enforce the

remedial provisions of an arbitration award which would

require the employer to violate the terms of another col-

lective bargaining agreement.”

and defined “the nub of the dispute” as “if the Court directs en-

forcement of the arbitrator’s award it may be affirmatively

causing the employer to be ordered to commit an unfair labor

practice under 29 U.S.C. §158(1).1* This cannot be done”

(App. p. 90, infra, emphasis added).

Ostensibly eschewing a direct holding that to enforce the

award is to require the employer to commit an unfair labor

11 Actually, no NLRB “Order” was ever sought—much less—is-

sued. Presumably, Judge Coleman refers to the IAM “certification.

12 and 128 Presumably, Judge Coleman means bargaining “agent”.

13 In dissent, in panel, Judge Coleman had also argued §158(a)(3)

was violated. The en banc opinion, at footnote 7, eschews any deter-

mination as to §8(a)(3) violation.

a

practice, the en banc majority holds “that the award was re-

pugnant to the NLRA, and [we] accordingly affirm the District

Judge...” (App. p. 93, infra).

In short, the en banc majority views the arbitral award as (1)

requiring Standard to violate its contract with IAM, and (2) as

requiring Standard to take action which the Court viewed as

“repugnant” to the NLRA.”!4*

Five judges'® joined in dissenting, for in their view the award

does not conflict with the NLRB certification of the IAM, nor

does it require Standard to violate the terms of its agreement with

the IAM (App. p. 99, infra) .1°*

14 The en banc majority holds at App. p. 93, infra, that:

“Unions are vitally concerned, and properly so, with their right

to bargain over wages, benefits, seniority and working condi-

tions. Section 9(a) of the NLRA expressly recognizes such a

right for a union if it is certified by the NLRA. If a contract

or an arbitration award conflicts with that policy, the statutory

policy must prevail. We think that a contract specifying that an

employee transferring to another plant operated by the same

employer would continue to receive the same wages and bene-

fits that he received at the old plant, despite the existence of a

contract with another union at the new location would be un-

enforceable. It necessarily follows that an arbitration award

poo seeks to achieve the same impermissible result cannot be

enforced.”

4* Yet significantly, the Court did not itself hold that by taking

the action required by the award it would commit an unfair labor

practice. The majority, in agreement with the dissent recognized that

as a function of NLRB—not the Court.

19 Tuttle, Wisdom, Goldberg, Rubin and Vance.

*5* On June 9, 1978, upon expiration of the IAM contract with

Standard Brands in Denison, the NLRB conducted another election.

In this election IAM received only one vote, the Teamsters received

fifty-two votes, and thirty-four votes were cast for no union. Com-

pany objections to the election have delayed certification of the

Teamsters as the collective bargaining agent. A motion for rehearing

en banc presented the facts of this election to the court. The court

denied the motion without opinion. App. p. 104, infra.

—_,

REASONS FOR GRANTING THE WRIT

l

The importance of the questions hete presented comes in

focus when the holding of the Court of Appeals is considered

in the context of the plight of workers, their unions, and the

economies of the North and Midwest from which their em-

ployers are moving to the “Sunbelt,” or to rural locations.

As the Court of Appeals wrote at App. p. 95, infra:

“The movement of plants from one location to another,

the transfer of functions between plants, and the movement

of workers between plants are subjects of vital concern

for both labor and management. Employees are interested

in continuity of employment, income, and seniority rights.

Employers, on the other hand, need flexibility to respond

to competitive forces and to increase efficiency. Such agree-

ments are important, perhaps necessary, features of the

modern mixed economy and are entitled to be respected.”

Accordingly, “. . . contractual provisions such as those at

issue in this case have become a common feature in collective

bargaining agreements nationwide.”'® They have long been

regarded as .a necessity in protection of employees against un-

scrupulous employer undercutting of their union wages and

conditions.'7 See, “Plant Relocation: Catching Up With the

Runaway Shop,” XIV Boston College Law Rev. 1135-1169

(1973).

Mobility of industry in this age is a commonplace. Move-

ment from the industrial (and organized) North to the Southern

16 Majority en banc opinion App. p. 95, infra.

17 Hearing before the Subcommittee on Labor Standards on the

National Employment Priorities Act at p. 73. See also; Rifkin &

Barber, The North Will Rise Again, Beacon Press, (1978).

ae

(and unorganized) “Sunbelt” is increasing. Major changes in

plant locations have occurred in the last decade—and further

changes are imminent. Responsible publications proclaim that

there is a veritable reshaping of the demographic and economic

map of the nation. See “Business Loves the Sunbelt (and Vice

Versa)” Fortune, June 1977; pp. 132-146; and “The Second

War Between The States, Bitter Struggle for Jobs, Capital, and

People,” Business Week, May 17, 1976, p. 92 ff.18 Or as the

testimony before a Congressional Committee recently revealed:

“Here is a company that built a billion dollar corporation

because of the sweat, tears, and muscles of the Akron

employees. They have expanded to almost every State in

the Union, even to most foreign countries, and yet they cut

jobs from the very plant that gave them its beginning.

It’s sort of sad, isn’t it, Mr. Chairman? Here is a company

that over the years has not only raped the natural resources

of the community: The water, the air and the land, and

yet even the citizens, and has never really paid for its

fair share. Here is a company that really feels it has the

*8 “As long as the migration of industry and population was

gradual from what was a relatively rich Northeast to what was a

relatively impoverished South and Southwest, it helped to unify the

nation. But within the past five years the process has burst beyond

= bounds that can be accommodated by existing political institu-

ons.

Less than three years ago, the Commerce Dept.’s Bureau of Eco-

nomic Analysis published projections for 1980 and 1990 of the

population, personal income, and employment in each of the 50

states—Arkansas, Louisiana, Mississippi, South Carolina, Arizona,

Texas, ‘Utah, Alaska and Hawaii—had already exceeded their 1980

Projections in population, and one state—New Mexico—had already

surpassed the 1990 figure. By the same token, the shortfall in slower-

growing regions has been enormous. For example, New York was

expected to grow by 1.1 million people from 1970 to 1980, but thus

far the state has lost more than 100,000. Pennsylvania, slated to

” nearly 800,000 during the 1970s, has increased its population

y barely 30,000 thus far. This is virtually the same growth posted

by Illinois, where the BEA expected a rise of nearly 900,000.’

—_ en

right to destroy the families of thousands of its employees

simply by saying, ‘We are moving on.’ ”?®

In the past decade there have been two trends in plant reloca-

tion. Companies have moved from the north to the south and

from the cities to the suburbs, and now to small towns. (For

statistics on movement from north to south see Table entitled

“Employees on Manufacturing Payrolls, by Region and State,

1967-75,” Handbook of Labor Statistics, for numbers on urban-

rural movement see Maurice Fulton, New Factors in Plant

Location, 49 Harv.Bus.Rev. 4, 5-6 (May-June 1971).?°

As the industrial migration continues the rural South will

for sometime provide a large pool of inexperienced and willing

labor, abundant land, tax concessions, and state legislatures

attuned to providing industry a “healthy business climate.”

19 Hearings before the Subcommittees on labor standards of the

Committee on Education and Labor, House of Representatives, on

H.R. 76, the National Employment Priorities Act, Akron, Ohio,

May 9, 1975.

20 Headlines in the Dallas Times Herald, January 21, 1979 pro-

claimed: “Bill aims to stem Snowbelt exodus” and stated:

“Sen. Harrison A. Williams, Jr., of New Jersey will introduce

landmark legislation later this month aimed at slowing the

exodus of industry from the Northwest and Midwest, it has

been learned.

The measure would require employers to provide for the

financial security of their workers before closing up shop or

moving to another state. =

The bill is —- to lead to one of the hottest labor-related

debates of the 96th Congress. Strong opposition is anticipated

from the business community and from the ‘Sunbelt’ states which

often are the beneficiaries of plant closings in the Northern

‘Sunbelt.’

Williams, a Democrat, is chairman of the Senate Human Re-

sources Committee.

A draft of the proposed legislation, obtained by the

Newhouse News Service, shows it would obligate an employer

to protect the ‘social and economic health’ of his workers in

—:

Energy savings resulting from environmental characteristics are

additional reasons to accelerate industrial movement.??

Organized employees, and the unions which represent them

protect against the employer who announces “We are moving

on,” by obtaining collective bargaining protections similar to

those at bar.

Yet, the Court of Appeals says, they are not to be specifically

enforced,?? and this is the Court which declares the law for that

portion of the Sunbelt which stretches from Florida to Texas—

the very area into which the nation’s industry is moving.

The rights here at issue—those of incumbents provided in

collective agreements—as well as those of new hires in low wage

areas to which industry moves—all evolve from the same federal

statute. The balance to be drawn requires definitive decision of

important questions of broad application. As we demonstrate,

the Court of Appeals’ holding that incumbent's contract rights

are obliterated by the employer contracting with others is plain

error.

the same way he now is required to protect the environment of

the area where the plant is located.

‘Just as a firm must now recognize that its pollution is a social

cost for which the firm must take some responsibility, it is now

time to recognize that the relocation or ioee of a plant or

factory by a firm imposes costs on others for which the firm must

be in some part responsible,’ the draft states.”

21 See Fulton, “New Factors in Plant Location,” 49 Harv. Bus.

Rev. 4, at 5-6, reporting that more than 33% of the moves are to

small non-metropolitan areas. He predicts: “the trend is likely to

continue, particularly away from the largest cities.”

*2 Compare the Court of Appeals (at p. 7006):

“We think however, that if the Denison plant had not been

oo gen prior to the award it would have been readily enforce-

able in its entirety against Standard.”

am 16 —=

2

Quite aside from these important practical questions is ihe

necessity of providing guides as to the balance between rights

specified in lawful collective bargaining agreements and those

flowing from NLRB certifications. Not since Carey v. Westing-

house, 375 U.S. 261 (1964) 11 L.Ed.2d 320 has this court

addressed the questions of the respective roles of arbitration and

NLRB bargaining unit determinations. There this Court en-

dorsed arbitration as a means to solve either work assignment or

representation disputes. And though not there met with con-

flict with an NLRB Order, stated that in the event of such

conflict, the NLRB Order would prevail.

But does an arbitral award “conflict” with an NLRB § 9(c)

“certification” (as distinguished from a § 10 “Order”), when it

specifically enforces individual employees’ seniority and wage

rights provided in their Union agreement?

In Civil Rights cases this Court found no conflict with the

federal statute in honoring established and lawful seniority sys-

tems and “slotting” those workers who have been the victims

of unlawful racial discriminations in the bona fide seniority

systems provided by the collective agreement.

So here, there should be no impropriety in assigning metropoli-

tan employées who move to the new plant the seniority they

would have enjoyed had the employer not violated their con-

tract rights.

And “Red Circle Rates” are a commonplace in the world of

labor relations—i.e., the assignment of particular individuals

rates above the contract minimum is often done—and for a

variety of legitimate reasons. Does such assignment “violate” the

certification issued by NLRB?23 May a court, on speculation

23 As we have seen supra p. 11, both the LAM contract and the

NLRB certification expired in June 1978. There then could not be

“conflict” with the expired contract or the superceded certification.

— ee

that it might, refuse to vindicate by specific performance the

rights provided in a collective bargaining agreement which is

the favorite of the federal policy?

Both NLRB and arbitrators are essentials in the statutory

scheme by which workers rights are to be protected, and the

public’s stake in the stability of labor relations which flows from

enforceable collective bargaining agreements is to be vindicated.

The procedures and powers of both the administrative law

and the arbitral process are a necessity to promote the national

labor policy. Until and unless there is actual conflict, neither

should be required to give way to the other. Surely, the lower

court's general notion that to vindicate rights to jobs and wages

is somehow “repugnant to,” though not necessarily violative

of, the National Labor Relations Act ought not to stand.

3

The conventional remedy for violation of a collective bar-

gaining agreement is specific performance.24 Yet the remedy

is to be denied, says the majority below, because the employer

has now signed a contract with another. The conventional rem-

edy is denied because he who broke the agreement, has blocked

the remedy by subsequent contract with another union.

When S sells a house to B-1, he may not avoid specific per-

formance of his agreement to deliver the house to B-1 by his

subsequent agreement to sell it to B-2.?°

Labor relations policy considerations do not point to any

different result. Indeed, labor policy reinforces what would be

24 The majority en banc wrote at App. pp. 92-93, infra:

“. . . if the Denison plant had not been organized prior to the

award, it would have been readily enforceable in its entirety

against Standard.”

29 The Law of Contracts, Baker Voorhis & Co., New York, 1920,

$1429.

‘anak ME ati

the certain result in commercial law. Federal labor policy

encourages and protects the collective bargaining contract, pro-

vides for its enforcement by specific performance.

Federal labor policy protects against the runaway shop; for

as NLRB has redundantly held, plant relocation becomes

unlawful when the move is effected, as here, for anti-union mo-

tives. See “Plant Relocation—Catching Up With the Run-

away Shop,” XIV Boston Col. L.Rev. 1135 (1973); Sheink-

man, “Plant Removal Under the National Labor Relations

Act,” 16 NYU Conf.Lab. 81 (1962), and cases there cited.

Admittedly, specific performance of limitations on plant re-

moval provisions in collective agreements will have some ad-

verse affect upon putative or newly hired workers at the new

plant. These new hires have statutory rights to self organiza-

tion and collective bargaining. But to elevate the rights of the

new employees at the rural location above the contractual

rights of 30 year veterans is to turn the statute topsy-turvy.

The purpose of the statute is to promote the practice of col-

lective bargaining, to foster written collective agreements to

which all parties are to be bound. Rights so established should

not evaporate when an employer violates both his collective

bargaining agreement and the statutory rights of his employees.

Here, the move to Denison was (as the arbitrator found)*® for

the purpose of “going non-union,” and to discriminate against

the Dallas employees because of their Teamsters affiliation.

There is no suggestion here that NLRB viewed the enforce-

ment of the arbitral award as violative, either of its certifica-

tion, or as an unfair labor practice intrusion on the rights of

the rural employees. To the contrary, as the original opinion

26 The Circuit Court majority stated:

“.. . we are not unmoved by the employees’ situation. We also

accept the finding of the arbitrator and we do not condone the

company’s conduct. It is noteworthy that Standard itself does

not deny the contractual violations. . . .” (at headnotes 6, 7)

p. 7008.

am 19

of the Court of Appeals panel specified, charges of unfair labor

practice were withdrawn, with NLRB approval, upon the

NLRB counsel’s published opinion that no unfair practice was

shown.

The en banc majority does not dispute this—indeed, they

acknowledge (footnote 7) “. . . it would be difficult for the

NLRB to find the necessary discriminatory intent” to support

§8(a) (3) violation should the award be obeyed. The en banc

majority further is specific, at footnote 7:

“

. we certainly express no opinion as to whether en-

forcement of this award in the circumstances of this case

would constitute an unfair labor practice in violation of

29 U.S.C. 3158(a)(3). That is a task for the Board.”

It is, indeed. And unless and until the Board so finds, there

is no conflict with the arbitral award. In the absence of such

conflict, a valid award ought not be thwarted by a court’s

general notion that it is “repugnant” to the Act.

CONCLUSION

For these reasons a Writ of Certiorari should issue to review

the judgment and opinion of the Court of Appeals for the

Fifth Circuit.

Respectfully submitted,

DAVID PREVIANT

6th Floor, Midland Bank Building

211 West Wisconsin Avenue

Milwaukee, Wisconsin 53203

L.N.D. WELLS, JR.

G. WILLIAM BAAB

8204 Elmbrook Drive, Suite 200

Dallas, Texas 75247

APPENDIX

ee

ay «ee

ARBITRATOR’S OPINION AND AWARD

In the Matter of the Arbitration Be- >

tween

Standard Brands Incorporated (Dallas Opinion

Margarine Plant) and

> Award

and (Denison Plant

Grievance)

Local 767, International Brotherhood

of Teamsters .

Before CHARLES J. MORRIS, Arbitrator selected by the

parties

NATURE OF THE CASE

This case concerns the opening of a new Standard Brands

margarine plant in Denison, Texas, and the closing of an exist-

ing margarine plant in Dallas. At issue are the rights, if any,

of the “production and maintenance employees and laboratory

testers” at the Dallas plant under a collective bargaining agree-

ment with Local 767, International Brotherhood of Teamsters,

successor to Local 159, International Union of United Brewery,

Flour, Cereal, Soft Drink and Distillery Workers of America,

AFL-CIO. The Union contends that the Dallas employees have

job rights at the new Denison plant, which is located about 75

miles from Dallas. The Company disputes this, contending:

that the Denison plant produces soft tub margarine which the

Dallas plant has never produced, that “Denison is not equipped

to manufacture quarter pound stick or whipped stick product,”

which the Dallas plant produces, that “no operations at the

Dallas margarine plant have closed [and] no Dallas employee

with seniority has been laid off as a result of the opening of the

= ee

Denison plant.” The Company made these contentions in its

brief filed on May 1, 1975. Since that date, the record has been

reopened to receive evidence that the Company will “perma-

nently cease operations at the Dallas margarine plant at the

close of business on October 3, 1975.”

It goes without saying that this case is governed by the col-

lective bargaining contract. But because that contract incorpo-

rates certain pertinent requirements in the National Labor Rela-

tions Act, I am especially mindful of the Arbitrator’s obligation

under the decisions in Spielberg Mfg. Co., 112 N.L.R.B. 1080

(1955), and Collyer Insulated Wire, 192 N.L.R.B. No. 150

(1971). In Spielberg the National Labor Relations Board de-

fined the standard under which it would defer to the arbitration

process when arbitration issues under a collective agreement

overlap unfair labor practice issues; to wit, when “the proceed-

ings appear to have been fair and regular, all parties had agreed

to be bound, and the decision of the arbitration panel is not

clearly repugnant to the purposes and policies of the Act.” In

Collyer, the Board reaffirmed the Spielberg doctrine and estab-

lished an additional doctrine: that it would withhold NLRB

processes in such cases prior to arbitration when the collective

contract made available a quick and fair means for the resolu-

tion of this dispute including, if appropriate, a fully effective

remedy for any breach of contract which occurred.”

The present case appears to meet the Collyer standards. Al-

though the Union claims that the Company had violated specific

contractual provisions, the conduct in question would also, if

brought to the NLRB, involve unfair labor practice questions un-

der Sections 8(a) (1), 8(a) (3), and 8(a)(5) of the NLRA (29

U.S.C. §141 et seq.) I am thus mindful of my responsibility to

the parties and recognize that this case severely tests the theory

and philosophy behind Spielberg and Collyer, for this decision

will, of necessity, treat such volatile issues as alleged discrimi-

nation against union membership, alleged denial of employment

on account of union representation, and alleged refusal to bar-

=<

gain in good faith—all however in the context of specific con-

tractual requirements. In attempting to meet the Spielberg

standards I do not lose sight of my primary objective, which is to

give effect to the contractual language which the parties have

negotiated.

GRIEVANCE—

The grievance herein was filed on November 21, 1974, and

reads as follows:

The union is filing a grievance on behalf of the Dallas,

Texas margarine workers. Cited in this grievance are Sec-

tion 13(E) and 13(F) of Part I and other pertinent clauses

covered by this contract. We feel these clauses cover these

employees because the building and opening of the new

margarine plant built in Denison, Texas will result in the

closure of the Dallas plant and will adversely affect the

employees covered by the current labor agreement now

in effect.

We further feel that the thirty people whose names were

submitted for transfer are covered by Section 14(E) of

Part I. We are requesting arbitration on these issues.

PERTINENT CONTRACT PROVISIONS—

The following provisions of the collective bargaining con-

tract are pertinent:

Part VIII, Section 1—

BARGAINING UNIT

The Company recognizes the Union as the sole and

exclusive collective bargaining agent for all production

and maintenance employees and laboratory testers at the

_—

Company’s margarine plant at Dallas, Texas, excluding

supervisory, clerical and professional employees.

Truck drivers and helpers loading or unloading will be

permitted only in the immediate dock area. All orders

will be filled by Local 159 bargaining unit members.

Part I, Section 13—

SEVERANCE ALLOWANCE, PLANT

CLOSINGS AND TRANSFERS

(a) Before any plant or department is closed, the Un-

ion will, if possible, be given thirty days’ prior notice.

(b) Employees with ten years or more of service who

are permanently laid off for lack of work due to techno-

logical improvement, or changes in production methods

or processes including the method of shipping, receiving

or handling materials, the closing of a department or a

plant or part of a department are entitled to a severance

allowance of one week for each year of service to a maxi-

mum of thirty weeks. An employee with three but less

than ten years of service so laid off is entitled to a sever-

ance allowance of one week for each year in which he

worked one thousand or more hours and one-half week

for each year in which he worked less than one thousand

but more than two hundred hours and none for any year

in which he worked less than two hundred hours.

(c) A permanent lay-off is one which is expected to

last for six months or longer. . . .

(d) An employee paid a severance allowance shall cease

to be an employee of the Company and, if rehired, shall

be a new employee but have no rights under this provi-

sion based upon his service ante-dating receipt of his

Severance Allowance.

—

(e) Should the operation at any location be transferred

permanently to a new or existing plant the available jobs

~ at such plant will not be filled unti! employees of the

affected plant have been given reasonable notice and the

opportunity to fill them in accordance with their seniority

and to transfer to the new plant. In the case of existing

plant the foregoing provision shall be subject to the prior

seniority rights, if any, of employees in such plant. Upon

moving to the new location employees will be paid such

reasonable moving expenses as the Company and the

International shall determine. Any such payment to an

employee will be deducted from his severance allowance,

if any, and the balance of such severance allowance shall

be paid if such employee is thereafter permanently laid

off or if he thereafter quits within a year.

(f) In case of transfer to a new plant, if permitted un-

der the National Labor Management [sic] Relations Act,

that Part of this Agreement relating to the plant affected

shall cover such new plant.

(g) The provisions of this Section 13 do not limit dis-

cussion between the Union and the Company on questions

relating to the effect on Employees of plant or depart-

ment closings or transfers. To implement such discussion

the Company shall appoint one representative and the

International one representative to the Committee hereby

created to develop answers to the questions raised and,

if they don’t agree, they shall appoint a third and impar-

tial member to join the Committee as Chairman to re-

solve such disagreement. ,

—_ oe

Part VIII, Section 4—

SENIORITY

(a) Seniority shall be based upon length of service with

the Employer since the most recent hire.

e * * * * * *

(d) Should it become necessary to lay off employees,

they will be laid off in accordance with their plant-wide

seniority.

> * * od * * *

(f) Employees with seniority who are laid off shall be

recalled in reverse order to that in which they were laid

ee

. .. Seniority shall . . . cease under the following condi-

tions: . . . 4. Upon lay off for a period of twelve (12)

months or longer.

Part I, Section 14—

UNION SECURITY

(e) The Company will not interfere with the right of

the Employees to become members of the Union and will

not discriminate against any Employee because of such

Union membership or Union activities.”

Part I, Section 3—

DISCIPLINE

(a) Employees may be discharged or disciplined only

for fair and just cause. .. .”

Part I, Section 15—

0 ane Sg eee

DISPUTES

(a) This agreement, which includes all Agreements made

part hereof by reference and all Agreements herein referred

to, fixes all terms and conditions of employment for the

Employees whether or not specifically referred to, pro-

vided for or considered by the parties hereto and both the

Company and the Union specifically waive any and all

rights which each may have to compel the other to bargain

collectively during the term of this Agreement to change

or add to this Agreement on any subject matter not cov-

ered by this Agreement except as provided in Section 16

hereof.

(b) Since complete and adequate remedy is provided by

the terms of this Agreement, no alleged or other violation

of any provision of this Agreement shall give cause to sus-

pend, invalidate, violate or terminate any part of the

Agreement.

* * * * * * *

Part VIII, Section 9—

DISPUTES SETTLEMENT

(c) Any grievance, dispute or misunderstanding which

may arise concerning the interpretation or application of

the provisions of this Agreement shall be presented. . . .

(d) Upon the request of the Employer or the Union the

matter may be submitted to an impartial arbitrator. . . .

* * * * * * *

(f) . . . The arbitrator shall have no power to add to

or subtract from or modify any of the terms of this Agree-

ment, or any agreement made supplementary hereto.

_—

STATEMENT OF FACTS—

The facts were developed in two hearing sessions in Dallas,

Texas, at a visitation to the Dallas plant, and through submission

of additional documentary evidence by express or implied limited

motions to re-open the record. The formal hearing sessions

were recorded by a Court Reporter in 583 pages of tran-

script, and witnesses were sworn. Both parties introduced quan-

tities of written and photographic exhibits and filed comprehen-

sive briefs. The first hearing was held on February 28, 1975.

At the close of that session both parties rested subject to a visit

by the Arbitrator to the Dallas plant on March 5, 1975. At

the close of that visitation, the Company attorney indicated an

intent to file a motion to reopen the record, whereupon the rec-

ord was opened for further hearing on March 10, 1975, follow-

ing presentation on that day of the Company’s motion to reopen;

the Union’s objection to reopening the record was over-

ruled. Both parties filed briefs on May 1, 1975. Additional

documentary evidence submitted to the Arbitrator by appro-

priate letter or motion included copies of the following: (1)

the Intervenor’s [Teamsters’] Exception to Regional Director’s

Report on Objections with supporting brief in NLRB Case No.

16-RC-6822 dated March 17, 1975; (2) Decision and Certi-

fication of Representative in NLRB Case No. 16-RC-6822,

dated May 22, 1975; (3) Collective bargaining contract cover-

ing Denison Margarine Plant employees between Company and

Local Lodge 2082, International Associations of Machinists,

dated June 8, 1975; (4) Notice, dated September 2, 1975, from

Company to “Dallas Margarine Plant Employees, members of

Teamster Local 767,” advising that Dallas plant would close at

close of business on October 3, 1975.

The Dallas margarine plant is located in an old brick building

on the edge of the central business district of downtown Dallas.

The building was old when it was first used to manufacture

margarine in the late twenties or early thirties. Its construction

eS re

features suggest that it is among the oldest manufacturing plants

presently being operated in Dallas. The operation was acquired

in 1940 by the Standard Nut Margarine Company of Indiana-

polis, Indiana. Standard Brands Incorporated acquired Stand-

ard Nut in 1943, including the ownership of the Indianapolis

margarine plant and a lease of the Dallas margarine plant.

Standard Brands (hereinafter called the Company) has never

owned the property at the Dallas plant but has leased it from

1943 to the present.

In addition to the Dallas and Denison plants, the Company

also operates margarine plants in Oakland, California, Atlanta,

Georgia, and Pennsauken, New Jersey. Prior to the building

of the Denison plant, the newest plant was the one at Penn-

sauken, which was built by the Company in 1961 on land

owned by the Company, and it is the only one operated non-

union.

There are 48 regular employees within the bargaining unit

at the Dallas plant. As noted from the seniority list dated

January 14, 1975, 3 of these employees have 30 or more

years of service, 8 have 20 or more years of service, and 26

have 10 or more years of service. The complete list reads as

follows:

Employee Seniority Date: Employee Seniority Date:

J. P. Raulston 9/19/41 G. E. Phillips 9/13/56

W. T. Harrison 6/18/43 T. L. Hennig 9/30/57

G. Boon 10/04/45 H. E. Williams 1/21/58

O. M. Murley 9/16/52 E. Yarbrough 4/08/59

F. J. Gore 11/02/53 F. Weatherall 9/11/59

L. V. Thompson 5/11/55 D. P. Crow 1/04/60

Z. Sherrell 8/30/55 M. M. Van Briggle 1/05/60

W

. S. Jenkins 9/21/55 J. R. Brown 10/10/60

J. Lerro 1/09/56 F. Steed, Jr. 5/23/61

rs)

— A-10 —

Employee Seniority Date: Employee Seniority Date:

C. M. Clay 6/18/62 D. Mendoza 7/14/70

A. E. Rose 3/25/63 M. Pinkney 12/03/70

B. R. Dunn 3/26/63 J. B. Guillory 12/14/71

W.F. Manning 11/11/63 E. M. Browne 2/06/73

A. H. Brown 7/06/64 D. F. Richardson 2/06/73

K. Ridlehuber 7/27/64 B. J. Badgett, Jr. 2/26/73

J.C. Chambers 9/07/64 D. Dunn 7/30/73

R. C. Daugherty 6/03/65 H. F. Sangster 8/20/73

N. F. Rogers 7/15/66 T. C. Krase 8/27/73

L. Coleman 9/12/66 H. Simmons, Jr. 8/28/73

J. C. Ball 9/12/66 M.E. Wheeler 10/31/73

J. H. Durden 9/22/69 L. E. Hinton 11/08/73

A. Gonzales 9/30/69 C. A. Attaway 1/24/74

J. L. Thomas 10/06/69 J. P. Keen 9/13/74

J. L. Buckley 12/11/69 I. Anderson 9/13/74

I visited the Dallas plant in the presence of the parties and

also studied photographs of the interior of the plant and its equip-

ment and considered extensive testimony about the condition

of the plant and equipment. I conclude from such direct ob-

servation and evidence that the physical premises are in an

extremely run-down condition and that the equipment, with

minor exceptions, is quite old—most of it was there 23 years

ago when observed by one of the witnesses. There is almost

no new equipment in the plant, and what little there is, such as

a hot water heater, was installed on a replacement basis to keep

the plant operational. This is not to say, however, that the

Company has neglected essential maintenance or that the

premises are not adequate for the manufacturing operation per-

formed. The record does not reflect the exact size of the plant

area, but it is undisputed that the plant is already crowded and

that there is no room for addition of more manufacturing lines.

There are presently three manufacturing lines at the Dallas

— |

plant: 2 quarter-pound (stick) margarine lines and one whipped

(stick) margarine line.

Not only is there no room at the Dallas plant for expansion,

there is also the distinct possibility that some of the existing

property will be absorbed into the widening of Harwood street

on which the plant faces. This fact became known when such

widening was included in a city plan published in April, 1971.

Donald Williamson, manager of the Dallas plant, obtained the

plans when they were released and called them to the attention

of Company personnel at the New York headquarters.

The lease agreement covering the Dallas plant was originally

dated May 29, 1963. On January 16, 1964, it was amended,

and from that time until September 6, 1973, the Company exe-

cuted three extensions of three years each. The last such term

was executed on October 30, 1970. It was during that term

that the Company began seeking a new plant site in the vi-

cinity of Dallas. In September, 1972, the Company made in-

quiries of the Denison Chamber of Commerce concerning a

possible site location in Denison, and on October 14, 1973,

the Company announced selection of a tract at Denison on

Highway 84 just outside of Denison. Site preparation was sched-

uled for November, 1973, and on December 11, 1973, the

property was surveyed by a registered public surveyor. The

plant that was subsequently built at this location and formally

opened on November 1, 1974. One month prior to announc-

ing the Denison plant site, the Company entered into a letter

agreement with the owners of the Dallas plant property in

which, for the first time, only a one-year lease was signed. That

agreement also provided an option to renew for two additional

one year periods. On October 25, 1974, the Company exer-

cised its option, thereby extending the lease for a one year pe-

riod commencing on February 1, 1975, and terminating on

January 31, 1976.

— A-12 —

The evidence is overwhelming that the reason the Company

built the Denison plant was to replace and expand the produc-

tion of the Dallas plant. There were many reasons to anticipate

the closing of the Dallas plant, including the age of the plant,

the age of the equipment, higher utility charges, higher oil

freight rates, and the possibility of street construction on Har-

wood. Despite the Company’s efforts during the hearing to

treat the opening of the Denison plant separate from the clos-

ing of the Dallas plant, the Company’s Director of Labor Re-

lations, Byron Hawkins, conceded the linkage between the two

events. When asked by the Arbitrator if he knew why the Com-

pany decided to build the Denison plant he replied: “The higher

costs of freight from the Indianapolis area, the greater penalty

that was being paid by trucking down. There was no room to

expand the Dallas plant. The Dallas plant is a leased plant. Not

owned. It’s an old plant. It’s bounded by other buildings, by

highways.” (Emphasis added.) He explained that there were

“a number of uncertainties and concerns because of the age of

the Dallas plant, very real concerns . . . the marginal nature

of the plant, the fact that it does only have three lines of mar-

garine production.” Although he stated—erroneously as later

evidence showed—that the original design for the Denison plant

was to produce only soft margarine, he was careful to point

out: “I don’t think anyone is in a position to say that quarter-

pound margarine will not be produced in Denison with the big

new facility. One certainty is involved because of the age of

the [Dallas] equipment, the age of the plant, the highway con-

struction, and a number of other factors, utility costs and so on,

it’s entirely possible.” It was more than possible. Hawkins, who

was the Company’s only witness at the first hearing, admitted

that he was not a party to decisions regarding the opening and

closing of plants and transfer of production facilities; specifically

regarding the Denison plant he said that “people in the mar-

garine division and in the grocery products manufacturing di-

vision in New York would be the ones to make that decision.”

At the second hearing, Robert Olsen, Operation Manager for

— A-13 —

the Margarine Division, who was called by the Company as a

witness for the limited purpose of describing the efficiency and

operating conditions of the Dallas plant in comparison to other

Company facilities, supplied additional evidence on cross-exam-

ination and on examination by the Arbitrator about the Com-

pany’s object in opening the Denison plant. He said the “Den-

ison plant is supplying soft products for the same service areas

that are supplied by the Dallas quarter-pound, bulk and whipped

stick,” but such production represented only about 3% of the

Company’s total margarine production. When questioned as to

the efficiency of such a limited operation at such a large plant

—the Denison plant has 100,000 square feet of floor space and

a present capacity for 9 manufacturing lines only two of which

are now being used—-he conceded the possibility that at some

time in the future there would be a full line of margarine pro-

duction at Denison. At first he said—again erroneously, in view

of the evidence later developed—that “there was no long-range

projection as to what was plannned for Denison. It was planned

to produce soft products and to relieve the Indianapolis load.”

But when pressed he admitted that “sometimes in the future,

yes, I’m sure we will” put in some lines which will duplicate

some of the Dallas lines. (Emphasis added.) When asked if

this would involve. use of Morpak machines of the type used in

Dallas, he was able to suggest that Benhil rather than Mor-

pak machines would be used. Such specificity had a basis in fact,

as additional evidence later confirmed. Mr. Olsen further linked

the Denison and Dallas plants by his description of the common

marketing arrangements. The Company’s salesmen take orders

for products from both plants, and the orders are turned in to the

Dallas plant only “and the Dallas plant arranges to either load

their products first and then pick the balance up in Denison, or

they will contact the Denison plant to load their soft products

and finish the loading in Dallas going southbound.” He con-.

firmed that in terms of marketing the Denison plant is depend-

ent upon the Dallas plant in this same area, which is primarily

the southwest part of the United States, and that as far as the

— A-14—

salesmen are concerned the two plants are virtually operating

together. He further stated that if the Dallas plant were closed,

he knew of no reason presently why the bulk of the area aow

served by the Dallas plant would not be served from Denison.

Regarding his refusal in February, 1974, to assure the Union

that jobs at the Dallas plant would not be eliminated by reason

of operations at the Denison plant, which is discussed in detail

below, he testified that “eventually” some jobs at the Dallas plant

could be eliminated by reason of the Denison plant, and that

in his communication to the union at that time he had to take

into consideration the possibility of closing the Dallas plant,

which closing was “still a possibility.”

Mr. Olsen noted two economies associated with the Denison

facility as compared with Dallas: (1) the cost of oil was less—

this was confirmed by the fact that the major oil suppliers for

the company were Anderson-Clayton, whose plant was located

ten miles away, and Safeway, whose plant was only two

miles away; and (2) the per hour labor cost was lower at the

Denison plant than the Dallas plant. Also bearing on the Com-

panys’ intentions was Mr. Olsen’s responses to questions con-

cerning the cost of the Denison facility. Total acreage, estab-

lished earlier by a map and Mr. Hawkins’ testimony, was 63%

acres, of which 37 acres was deemed excess and was therefore

for sale. The plant of 100,000 square feet of floor space was

constructed from the Company’s own funds at a cost estimated

by Mr. Olsen at three and a half or four million dollars. He

indicated an additional one million dollars for cost of equip-

ment, bringing the total investment at Denison to four and a

half or five million dollars. Although no figures were introduced

to show profit and/or loss at that facility, it is obvious that

operation of only two manufacturing lines at such a large and

modern facility which has existing capacity for nine lines falls

far short of efficient and economical utilization.

a

— A-15 —

In response to a question on redirect examination, Mr. Olsen

said that there were no plans to close the Dallas margarine plant,

but on cross-examination he explained that although all sorts

of possibilities had been discussed, “no definite plans or time

table has been set for it;” in any event, however, he said he

would possibly not be privy to the final decision nor would he

be the one to make the final decision. His response to the Arbi-

trator’s final questions were frank and revealing:

Q. Were you privy to the original decision to open the

Denison plant?

A. I was involved in the original planning of the plant

premises, the equipment and so forth, the layout.

Q. And in laying out the plant it was laid out so that it

could accommodate a full line of margarine produc-

tion?

A. It was built for expansion, yes, and you could conceiv-

ably put everything into it.

Q. And not built for a limited line of just tub margarine?

A. No.

Those answers, though not brought out on direct examination,

stand in marked contrast to the Company’s efforts at the first

hearing to convey the impression that the Denison plant had not

been built to produce stick margarine; Olsen’s frank answers

contradicted the contrary testimony given by Byron Hawkins at

the first hearing. Hawkins had stated that “when the Denison

margarine plant was first designed it was clearly intended at that

time tobe a sixth margarine plant making only soft margarine,

only soft margarine.” (Emphasis added.) He partially modified

his position in later testimony but was still at variance with

Olsen’s answers and with subsequent evidence supplied by Jim

Windland, manager of the Denison plant. In Hawkins’ later state-

ment he said: “J think at the very outset [Denison] was planned

— A-16 —

primarily and perhaps solely as a soft margarine plant. I think

before it got very far along the plans were to put—to put a dif-

ferent formulation of quarter-pound margarine into that plant,

different formulations than what can be made on the Dallas

machines.” He acknowledged, however, that he was not really

privy to the decision of opening and closing plants and that he

personally did not know what the intent was.

The intent became crystal clear when Jim Windland finally

testified. Mr. Windland was not called as a Company witness;

when his testimony was requested by the Union, the Company at

first refused to produce him. Later, however, the Company re-

considered, and Mr. Windland drove in from Denison and was

called as an adverse witness by the union just prior to the close

of the hearing. Before referring to his testimony, however, an-

other statement by Labor Relations Director Hawkins should be

noted, for it was an additional statement in the pattern being

presented by the Company in order to show a separation be-

tween the Denison and the Dallas plants. He testified: “There

is no equipment in the Denison plant at this time for the making

of molded stick margarine.” As will be seen from Mr. Wind-

land’s testimony, that statement was not accurate. But the mak-

ing of the statement is important as corroboration of the Com-

pany’s intent to conceal the true molded stick margarine capa-

bility of the Denison plant.

Denison plant manager Windland testified that in the original

planning, quarter-pound lines were included “and we had even

got to the point of laying out the lines and so forth and it was

scrapped.” He said those original plans went back to October,

1973, which was the month when the Company formally an-

nounced the building of the Denison plant. He testified that the

plans were set aside but later revived. There is reason to be-

lieve, however, that corporate decision-makers were only post-

poning execution of the plans, not abandoning them. German-

made Benhil machinery for two lines of stick margarine produc-

— A-17 —

tion were actually ordered for delivery to Denison. The exact

date of the placing of the order is not known, but Mr. Windland

testified that “around nine months to a year” was required for

delivery, and delivery of the first line was made in late July or

August of 1974. Thus, either a new order for this equipment

had been placed in November, 1974, at the latest; or, more

likely, the original orders had never been cancelled. Mr. Wind-

land referred to the second plans for installation of these lines

and testified: “I’ve looked at so many plans and many things,

but there sticks in my mind a date of somewhere in the latter

part of May [1974], but now whether that’s on that, on the plans

on this second group of plans or whether it’s on a revision of some

other plans, I really could not definitely say.” He went on to

say, however, that a full line of Benhil equipment was received

and that the parts of that equipment essential for quarter-pound

production are still in Denison, though in storage. The facts

concerning the concealment of that equipment are detailed be-

low, but before examining those facts and other related events, it

is pertinent to ascertain the Company’s motive for certain actions

it took in connection with the plants in question.

The evidence in the record is clear and convincing that the

reason the Company did not promptly carry out its original

and ultimate plan to open the Denison plant as a full capacity

margarine facility—including production of stick margarine

which had been produced at Dallas, thereby transferring all

production from Dallas to Denison—was to avoid dealing with

the Teamsters Union and avoid application of Section 13(e)

of Part I of the Union’s collective bargaining contract. That

provision requires: “Should the operation at any location be

transferred permanently to a new . . . plant the available jobs

at such plant will not be filled until employees at the affected

plant have been given reasonable notice and the opportunity

to fill them in accordance with their seniority and to transfer

to the new plant.” (Emphasis added.) Had such transfer oc-

curred, the entire Dallas collective bargaining agreement would

— A-18 —

conceivably have continued to be effective at the new plant under

Section 13(f), although such a finding is not necessary to the

Award in this case for reasons discussed below. Section 13(f) is

pertinent, however, insofar as it sheds light on the Company’s

motivation.

Evidence bearing on the Company’s anti-union motivation

is undisputed. The last plant built by the Company, the one

at Pennsauken, is non-union. A decision was made at the corpo-

rate level that the Denison plant was also to be non-union. Jim

Windland understood that intention; he testified in response to

a question from the Arbitrator: “All of the plans that I have

ever discussed with anyone on the corporate level was to operate

the plant non-Union.” (Emphasis added). That intent was

corroborated by an early statement made by Howard Pines,

the Company’s Director of Employee Relations. On December

15, 1973, which was shortly after preliminary work on the

Denison building site had begun, Mr. Pines told James C.

Holden, the Chief Steward of the Union for the Dallas plant,

that he knew that the Company was going to attempt to operate

the Denison plant “non-union.” That statement was made in

the presence of the manager of the Company's Dallas yeast

plant, Mr. Corbitt. Although the statement was revealed at

the first hearing, neither Pines nor Corbitt was called as a wit-

ness to dispute its accuracy. It is thus uncontradicted from

statements by Windland and Pines that the Company intended

the Denison plant to be a non-union operation, and various

actions which the Company took can be satisfactorily explained

only on the basis of that intent.

The plant itself was built large enough to encompass the

present Dallas stick margarine production, in fact the entire

Dallas operation including quarter-pound, whipped, and bulk

production; and the original plans, including engineering draw-

ings, specifically called for the erection of two manufacturing

lines at Denison for production of stick margarine. The latter

ee ————

— A-19 —

lines would have substantially duplicated most if not all of

the Dallas operation. A decision was apparently made around

October, 1973, to postpone installation of those lines, which

may have been at about the time the Company made its deci-

sion to operate non-union. If the plant was to operate non-

union, introduction of the stick margarine lines would obvi-

ously have to be postponed to avoid the initial transfer of union

employees from the Dallas plant. Subsequent events established

that the original plan to transfer the Dallas operation to Deni-

son was never abandoned—only conveniently postponed. It

was the Company’s plan that by postponing the transfer of

operations, ultimate transfer would be to an existing plant

rather than to a new plant, thereby avoiding—or so the Com-

pany hoped—the effect of prior seniority rights which the Dallas

employees would have if Denison was treated as a new plant

under Section 13(f); transfer to an existing plant would limit

the Dallas employees to available jobs at the existing plant,

“subject to the prior seniority rights, if any, of employees in

such plant.”

To carry out this policy, the Company told the Union as

little as possible and staffed the jobs at the Denison plant with-

out giving employees at the Dallas plant reasonable notice

and opportunity to fill them, notwithstanding the requirement

of Section 13(3). The opportunity was denied both as to new

jobs, such as those on the soft margarine lines, and as to old

jobs on the stick margarine lines which were clearly being

transferred—though slowly—to the new plant.

As early as November 8, 1973, the Union began its formal

efforts to obtain information and arrange a solution to the

impending problem. On that day James M. Holden, the Local

Union representative, wrote Dallas plant manager D. R. Wil-

liams as follows:

The union has information that Standard Brands Inc.

is in the process of building a margarine manufacturing

—~

plant at Denison, Texas. We believe that this plant is

being built to replace the one now located in Dallas,

Texas. We are concerned about the employees covered

by Part VIII of our labor contract. Although the new

margarine plant now being built will not open for some

time, we feel that it is in our best interest to start nego-

tiating the rights of the Dallas margarine employees un-

der Section 13 of our national agreement immediately.

We would appreciate your answer to this letter as soon

as possible.

Shortly thereafter, in the latter part of November, 1973, Mr.

Charles Cunningham, a foreman at the Dallas margarine plant,

told Holden in a casual lunchroom conversation that there was

“no doubt in our mind that they are going to close this thing

down.” When called as a witness by the Company, Cunning-

ham did not deny having made the statement, but added that

he “had not been told the plant was going to close.” His state-

ment that the plant would close, which I find that he did make,

may have been only his opinion, but because he was a super-

visor and because he saw the signs which suggested closing of

the Dallas operation in favor of the Denison plant, the state-

ment was probative together with other circumstantial evidence

bearing on the Company’s intentions. His statement also indi-

cated what may have been a general belief among many em-

ployees of the Dallas plant at that time. Notwithstanding, the

Company was not in any hurry to respond to the Union’s

November 8 request for negotiations and information.

The Company had in fact been busy making plans that

would have been quite relevant to the Union’s inquiry, includ-

ing the preparation of engineering drawings and the ordering

and purchasing of Benhil equipment. Although the Union’s

request in the Nov. 8th letter for negotiations under Section

13 of the National Agreement (Part I of the Collective bar-

gaining contract) was a request for negotiations and informa-

— A-21 —

tion under the contract, it would also be a request pursuant

to Section 8(a)(5) of the National Labor Relations Act (see

discussion of NLRB v. Acme Industrial Co., 385 U.S. 432

(1967), hereinbelow).

On December 13, 1973, Holden again wrote Williamson

as follows:

This letter is in reference to my letter dated November

8, 1973.

The union still has reason to believe that the opening

of a Margarine Plant in Denison, Texas will seriously

affect the Dallas Plant. Since you have not seen fit to

answer my letter, we feel that the company is avoiding

the issue. We are therefore restating our position pertain-

ing to Section 13 of the national agreement. We are also

advising you that we fully intend to pursue our rights

under this section to the fullest extent that we are ca-

pable of doing. We would appreciate your answer as to

the Company’s position on this matter.

On December 15, 1973, during a discussion about matters

relating to the Company’s Dallas yeast plant, where Mr. Holden

was employed, Mr. Howard Pines, the Company’s Director of

Employee Relations, told Holden “that as far as he knew there

would be no loss of jobs or shutdown of this Dallas margarine

facility;” however, he said he was only conveying the informa-

tion as a “messenger” for he was not part of the Margarine

Division. When Holden asked him for some assurance regard-

ing these matters, he responded that he “couldn’t give .

any assurance on this thing, that he wasn’t part of that divi-

sion.” It was then that he volunteered the information that

the Denison plant would attempt to operate non-union.

On December 12, 1973, James C. Paradise, attorney for

the Brewery Workers’ Conference of the Teamsters Union,

— A-22 —

wrote a letter to Howard Pines regarding certain problems

requiring prompt consideration and resolution, one of which

was “the rights of the Union and the Dallas margarine em-

ployees in respect to the new margarine plant in Texas,” and

requested a meeting “as soon after January 10 as possible.”

On December 27, 1973, seven weeks after the union’s re-

quest of November 8, Mr. Pines finally responded to Holden’s

letters as follows:

This acknowledges receipt of your letters of November

8 and December 13, 1973.

These letters were answered in the meeting you and I had

in Dallas on Saturday, December 15.

Hope you and your family had a nice Christmas, and

my very best wishes to you for a happy 1974.

On January 4, 1974, Holden wrote Williamson again:

To date no answer has been given the local union

to our letters concerning the future of the Dallas mar-

garine workers. In previous letters we expressed concern

over the new plant being built in Denison, Texas.

I received a letter dated December 27, 1973 signed by

Howard Pines. Mr. Pines letter told us exactly nothing.

In previous discussion with Mr. Pines I was told verbally

that the Denison plant would have no effect on the Dallas

plant. Mr. Pines has no connection with the margarine

division and was acting as a messenger only. We still be-

lieve the Dallas plant will be affected, and insist on nego-

tiations for our right to transfer to the new plant.

I would appreciate an answer to this letter stating the

Company’s full position on this matter. Verbal reassurance

is not enough.

Williamson responded as follows:

— A-23 —

This letter will acknowledge receipt of your letter of

January 14, [sic] 1974. As you know, I recently under-

went major surgery on my back and I am way behind in

my correspondence. I hope you will accept my apology

for failing to personally answer your previous letter.

Please be advised that I have asked Mr. Howard Pines

to handle your letter and I ask that all future communica-

tions on this subject be directed to him. Mr. Pines is be-

ing sent a copy of your letter of January 4, 1974.

And on January 23, 1974, Pines wrote Holden:

Please be advised in regard to your recent letter to Mr.

Williamson, I have also received correspondence on the

same subject from Mr. James C. Paradise.

A meeting has been set up with Mr. Paradise for Janu-

ary 24, 1974, at which time the Denison and Dallas Mar-

garine situations will be discussed.

The meeting was held on January 24, 1974, the substance

of which is reflected in the following correspondence.

On January 28, 1974, Paradise wrote Pines:

At our meeting at Brewery Workers headquarters in Cin-

cinnati on January 24th we discussed the above plant and

its possible effect on the existing margarine plant in Dallas.

I told you that I would submit a number of questions to

you in writing and it was agreed that you would give me a

written reply. The questions are the following:

1. What is the expected date for the commencement of

production operations at the Denison plant?

2. What is the date on which you expect to start hiring

at the Denison plant?

3. What products are to be manufactured at that plant?

— A-24—

4. Will any products presently being manufactured at the

Dallas Margarine plant be manufactured at Denison?

5. Will any of the operations at the Dallas plant be trans-

ferred to Denison, either immediately or in the foreseeable

future?

6. Is there any reason to believe that any jobs at the Dal-

las plant will be eliminated, either immediately or in the

foreseeable future, by reason of the operation at the Deni-

son plant?

7. Will equipment be installed in Denison for the manu-

facture of the same type of margarine as is manufactured

at Dallas?

8. Is the Company able to give the Union a firm commit-

ment to the effect that no jobs at Dallas Margarine will

be eliminated by reason of the operation of the Denison

plant?

I would appreciate a reply at your earliest convenience.

On February 12, 1974, Pines responded to Paradise by en-

closing a copy of the following letter from Robert L. Olson,

dated February 11, 1974:

INTER-OFFICE CORRESPONDENCE

TO Howard M. Pines Date February 11, 1974

FROM R. L. Olsen OFFICE Groc. Prod. Mfg.

Div. Hq.

Subject Denison, Texas Plant

The current situation in the margarine industry is the most

volatile we have ever experienced because, in addition to

the usual short- and long-term swings in consumer prefer-

— A-25 —

ence, we are also faced with shortages and sharp price in-

creases for corn and soybean oils, and shortages of various

packaging materials. Keeping the above uncertainties in

mind, following are the questions asked by Mr. Paradise

in his January 28 letter to you, and the answers to those

questions:

1. What is the expected date for the commencement of

production operations at the Denison Plant?

October 1, 1974

2. What is the date on which you expect to start hiring at

the Denison Plant? August 15, 1974

3. What products are to be manufactured at that plant?

Soft and quarter-pound margarine

4. Will any products presently being manufactured at the

Dallas Margarine Plant be manufactured at Denison?

Yes

5. Will any of the operations at the Dallas Plant be trans-

ferred to Denison, either immediately or in the fore-

seeable future? No

6. Is there any reason to believe that any jobs at the Dallas

Plant will be eliminated, either immediately or in the

foreseeable future, by reason of the operation at the

Denison Plant? No

7. Will equipment be installed in Denison for the manu-

facture of the same type of margarine as is manufac-

tured at Dallas? Yes

8. Is the company able to give the Union a firm commit-

ment to the effect that no jobs at Dallas Margarine will

be eliminated by reason of the operation of the Deni-

son Plant? No

— A-26 —

The margarine division fully intends, of course, to abide by

the provisions of the Dallas Margarine Plant labor contract.

Robert L. Olsen

Operations Manager

Margarine Division

The Union, however, continued to be suspicious, as indicated

by a letter dated March 25, 1974, from Holden to Thomas

Rusch, the Union’s Director of Organization. But Rusch was

then—but not later—inclined to accept Olsen’s assurance, say-

ing in his letter of March 27, 1974, to Holden that, based on

“reference to the Company’s position there will be no transfer

and there will be no loss of job, loss of any production or trans-

fer of work out of the plant operations at Dallas, Texas. /f this

is true we do not have an argument with the company.” (Em-

phasis added).

The Dallas employees and the Union representatives were not

assured, however; neither Olsen nor any other Company of-

ficial had disclosed to the Union what was really transpiring in

the planning and building of the Denison plant, and the Dallas

employees were fully aware of the visible limitations of the

Dallas physical plant.

As previously noted, the Company at that very time had an

order for delivery to Denison two Benhil lines which could dupli-

cate the Dallas stick margarine production; at the second hear-

ing Olsen confirmed that he was “sure” that the Company at

some time would put in lines which would duplicate some of the

Dallas lines and that the Denison plant was built so “you could

conceivably put everything in it.”

Olsen was therefore not being candid with the Union in his

letter when he advised that “in the foreseeable future” none of

the operations at the Dallas plant will be transferred to Denison.

Nor was he being candid when he stated that there was no rea-

son to believe that any jobs at the Dallas plant will be eliminated

— * ye

“in the foreseeable future, by reason of the operation at the

Denison plant.”

By May, 1974, as noted previously, the Company either re-

newed or revised original plans, or else drew a second set of

plans, for installation of the two Benhil lines in Denison to

produce stick margarine. In August, 1974, arrangements were

made for their installation.

At about that same time the Union began to make inquiry of

the Company through Dallas attorney James L. Hicks. On

August 8, 1974, he wrote R. A. Book, the Company's manager

of Employee Relations as follows:

On behalf of representatives of Teamsters Union 767,

please accept this letter as the Union’s inquiry regarding fu-

ture and further plans made by Standard Brands to change

operations at the existing Dallas facility. As we have previ-

ously discussed, there pends presently a grievance regard-

ing the company’s having changed the method of opera-

tion for delivery «f Standard Brands products. Please

advise me if there are any plans to alter in any way the pres-

ent method of operation at the entire Dallas facility. Al-

though not intended to limit the previous inquiry, we are

particularly concerned whether there are plans to sub-con-

tract or contract out any existing functions presently done

at the Dallas facility. Further, we wish to know whether

there are plans to move any of the existing Dallas functions

to the Dennison facility which we understand is presently

under construction.

.Please respond to this inquiry as soon as possible so that

if necessary we can begin implementation of our contractual

rights and negotiation of the impact upon potentially sepa-

rated workers.

Mr. Book did not reply until August 28, 1973, advising that

the “Company has made the union aware of any planned

|

— A-28 —

changes to the best of my knowledge,” (Emphasis added) in-

dicating that the matter was not in his area of responsibility.

Prior to Mr. Book’s reply, Holden had written Pines on Au-

gust 16, 1974, and on the same day Union director of Organiza-

tion Rusch also wrote Byron Hawkins, the Company’s Director

of Labor Relations. Holden write Pines as follows:

This letter is in regard to the Margarine Plant now under

construction in Denison, Texas.

The employees of the Dallas Texas Margarine Plant are

demanding to know what their status will be in relation

to the Denison plant. Will the Dallas plant be closed? Will

our people be given an opportunity to transfer to the

new plant pursuant to Section 13 of Part I? We feel we are

entitled to answers to these questions before the opening

of the Denison, Texas Plant. If we are not given written

answers to these questions we will take whatever action

necessary to assure the people in the Dallas plant of their

rights.

It is the opinion of the union that the company intends to

close the Dallas plant and will attempt to deny our people

their rights to follow the work.

We would like an answer to our questions immediately.

Time is growing short, since the Denison plant is sched-

uled to open October 1, 1974. We are also demanding full

union recognition for the Denison plant.

Rusch’s letter to Hawkins of the same date covered four sub-

jects, and including the following:

Dallas, Texas—Margarine—December 21, 1973—National

Agreement Sections 13 E and 13 F and Part VIII.

New Margarine Plant—Denison, Texas, which leaves no

doubt this new margarine plant will effect the employment

— A-29 —

Status and create undue hardship for the Dallas employees

and members of our Union. Dallas Local Union requested

negotiations for the transfer employment rights, etc., in-

cluding recognition December 21, 1973.

It is very obvious that the Company representatives in all

four situations have been stalling. They have not bargained

in good faith in the phasing out of the department closing

(Peekskill, New York) or the new plants being built in

Dayton, New Jersey or Denison, Texas.

We will not accept the continuous stalling tactics. We in-

sist On a settlement on all four problems.

Our Local Unions have made proposals to resolve some of

these issues and we get answers from Company representa-

tives in the negative. Therefore, I am recommending to our

attorneys immediate action for Unfair Labor Practice

Charges.

I think we have been more than patient, spent hours upon

hours getting no place on all four issues. It is about time

we clear up these important subject matters. I am sub-

mitting a copy of this letter to our Brewery and Soft

Drink Conference, 1.B.T. and the International Brother-

hood of Teamsters (Washington, D. C.) for their review;

my recommendations may not be to your liking, but our

patience (members and Officers) are at an end.

Awaiting your response for action.

Notwithstanding that very little time remained before the

Denison plant would open, there was no prompt reply to either

letter. The plant itself had been completed, and equipment

installation was scheduled for completion on October 15, with

production to begin thereafter. A flurry of activity relevant to

the concerns of the Dallas employees had in fact been occurring

in Denison since May and was now ready for completion. That

— A-30 —

activity related to the planned installation of the two Benhil

stick margarine lines and the Company’s efforts to conceal the

equipment and plans from the Union.

Bids had been let for the installation of those lines and, ac-

cording to Mr. Windland’s testimony, the bidding closed the

latter part of August. Meanwhile, all of the machinery for one

of the Benhil lines had actually been delivered to the plant

and placed in the production area.

Thus, at the very time that equipment which would duplicate ,

the Dallas operation was being delivered and scheduled for

installation, the Company was receiving strong and persistent

requests from the Union for information and negotiations.

Although the Union was entitled to have such information as

discussed hereinbelow regarding contractual and National Labor

Relations Act requirements, the Company’s response was to

play for time. The Company evidently decided to postpone in-

stallation of the Benhil lines until after the plant was staffed

with new employees for production of soft margarine, a product

which was not being produced at the Dallas plant. In this man-

ner, the Company undoubtedly hoped to carry out its intention

of operating the Denison plant non-union. While the Union

was being stalled by delays in responding to correspondence and

by providing no new information when letters were finally an-

swered, the Company was busy covering up the tracks of the

Benhil activity. The Union's final communication in August

surely must have reinforced the Company in its resolve to post-

pone the stick margarine lines, or it may even have been the

final factor in that decision. On August 27, 1974, Holden wrote

Pines as follows:

The union is demanding recognition and job rights for all

laid off employees of the Dallas Margarine Plant.

We are demanding that these employees be employed at

the Denison, Texas Margarine Plant. Since I have re-

ceived no answer to my last letter dated August 16, 1974

— A-31 —

we are again demanding follow the work rights for all

employees employed at the Dallas Plant. We feel that these

employees will be affected adversely by the opening of the

Dension, Texas Plant. We are again demanding recogni-

tion rights for all our employees.

At about the same time that Holden’s letter was received, a

top-level decision was made to call a sudden halt to the in-

stallation of the Benhil machines. I find that the reason for that

decision was the Company’s desire to avoid transferring the

Dallas employees to Denison and operating the plant with

members of Teamsters Union 767. Evidence to that effect was

overwhelming; and contrary evidence, particularly as to the man-

ner and timing of the decision was non-existent. The fact that the

sudden decision was even made would not have been established

in the record except for the fact that the Union succeeded in

calling Mr. Windland from Denison as an adverse witness.

He testified that the Benhil equipment for one complete line

was received at the plant in August or the latter part of July,

1974. This was sufficient equipment for one line of quarter-

pound production. Similar equipment for a second line was on

order and would presumably have been delivered in time for

installation under the engineering contract being let. However,

at the end of August the plan was suddenly “scrapped”. Mr.

Ben Cutrone, then General Manager of the Company’s Grocery

Products Manufacturing Division, telephoned Windland and

told him not to install the Benhil machines. No reason was

given. His disposition of the machinery that had already been

delivered is highly relevant, however. He asked Windland if

the machinery had been uncrated, and when told it was still

crated,. “He said just move them out in the warehouse and

leave them and we'll tell you later what we want to do with

them.” Later he told Windland to ship the votator (which was

an item which could be used in either tub or stick margarine

production, as would be true of the other votators that remained

in Denison) to Pennsauken, and the remainder of the equipment,

— A-32 —

the items essential for stick margarine production, were to be

put in storage. Windland complied by storing the items, a

Benhil machine and a case packer, in a commercial warehouse.

At the time of the second hearing (and presumably at the present

time) that equipment was still in storage at a charge of $100

per month. It has been in Denison, unused, for over a year.

In view of the fact that the Denison plant has much unused

storage space in seven empty lines in the production area, plus

much unused space in its warehouse where this machinery was

originally moved when the installation was suddenly cancelled,

I can only infer, there is no evidence to the contrary, that

the Company was trying to keep knowledge of the presence of

this equipment from the Union. And because the equipment

remains in the Denison area the Company at all times relevant

to this grievance has had a current intention of installing the

equipment in Denison, the effect of which would have been

to displace the Dallas operation. Windland’s only explanation

for his having removed the items from the plant and having

put them into monthly storage at an unnecessary cost was:

“Because I was directed by my superiors to take ii out of the

plant, put it into storage and said we'll tell you what to do with

it later.” (Emphasis added). It is reasonable to infer that the

same arrangements would have been made for the second line

of Benhil equipment had it been delivered prior to the sudden

cancellation of the installation plans at the end of August.

While waiting for official replies to their now urgent re-

quests, the Dallas employees were getting unofficial informa-

tion which seemed to confirm their fears. In the latter part of

August, 1974, Mr. Bill Crow, production foreman at the Dal-

las margarine plant, told James Holden and Thomas Rusch,

“we know that it’s going to close, that it’s going to affect this

plant.” He said that “we have talked about it in the office and

. . Don [Williamson] is scared. . . .” The Company called

Crow as a witness and he did not deny having made the state-

ments, though he said he was just giving his “own opinion.”

— A-33 —

I find Crow’s remarks probative for to the same reason as

foreman Cunningham’s. Crow’s position was higher than Cun-

ningham’s, and he was reporting from discussions “in the of-

fice,” therefore his remarks carried even greater weight. Since

the Company did not call Mr. Cutrone as a witness, his actions

and intentions, which evidently were synonymous with the

Company’s, must be evaluated on the basis of other testimony

and overt conduct. Mr. Crow’s statement about the effect of

the Denison plant and about the Dallas plant closing was true

and fully corroborated by other evidence outlined herein. His

statement is admissible; the Company’s objection to it goes to

the weight of the evidence only. Had Mr. Cutrone testified

to the contrary, I would have carefully weighed and consid-

ered such testimony. The Company, however, called no wit-

ness with personal knowledge to explain the key events elicited

from Windland’s testimony or to provide contrary competent

evidence bearing on motive and intent.

On September 4, 1974, Union attorney Hicks wrote How-

ard Pines, stating substantially what he had previously written

to Book.

And at long last, on September 10, Pines responded to Hol-

den’s letters (a cryptic acknowledgment had been sent on

August 26), but all he said was the following:

I have reviewed my file, and in response to your recent

letters I wish to remind you that I met and discussed the

Denison Plant with you on December 8, 1973. Further-

more, Mr. B. T. Hawkins and I met and discussed the

Denison Plant with Mr. James Paradise and Mr. Thomas

Rusch on January 24, 1974. Subsequently, on January

28, 1974, Mr. Paradise wrote a letter on your behalf,

and attached is our response dated February 12, 1974.

Pines thus refused to acquaint the Union with the recent events

relating to the Benhil lines, and by referring with finality to

discussions which had taken place almost a year earlier, on

— A-34 —

December 8, 1973, and January 24, 1974, he was in fact

refusing to recognize and bargain with the Union over matters

as to which there was a duty to supply information and bar-

gain.

On September 16, 1974, Rusch again wrote Pines regard-

ing the Denison and Dallas margarine plants:

With reference to the Denison margarine plant, the meet-

ing we had in Cincinnati on January 24, 1974 had no

bearing whatsoever as to the settlement of the new mar-

garine plant.

We again raise the question as to whether you are going

to live up to Section 13 and its various paragraphs relat-

ing to plant closings, departmental shut downs and new

plant operations. The statements that you are referring

to at our meeting of said date do not excuse you from

your obligation to your present employees or laid off em-

ployees of the Dallas plant.

I do not care what Mr. Olsen informs you as operating

manager of the margarine division, I cannot accept these

answers and I will hold you and your company respon-

sible for making whole any loss of wages for any laid off

employees of the margarine plant while you are employ-

ing employees in the new Denison margarine plant. This

also relates to job opportunities for present employees

working in your Dallas margarine plant.

Unless you give us a written guarantee that there will be

no lay offs in the present margarine plant in Dallas, Texas

I will not accept the information Mr. Olsen has given

vou.

The Company apparently did not reply, for no reply was

introduced in evidence. The Company then continued with-

out assistance of the Union or the Dallas employees, to staff the

Denison plant. The plant began production in the later part of

— A-35 —

October, 1974, and formally opened with appropriate cere-

monies on November 1. After production had started, Com-

pany Officials did meet briefly with Union representatives at the

Airport Marina Hotel, at the Dallas-Ft. Worth Regional Air-

port. The meeting was evidently timed to coincide with at-

tendance of the Company officials at the plant-opening cere-

monies in Denison the following day. The Company was repre-

sented by Labor Relations Director Hawkins and Thomas

Scully, Jr., Director of Employee Relations, Grocery Products

Manufacturing Division. The Union was represented by Holden,

Busch, John Hoe (of the Brewery Workers Conference), Ray

Hilsheimer, President and Business Agent of Local 767, and

Charles Moore, Business Representative of Local 767. The

Union asked for some assurance that the people in Dallas would

not be affected by the Denison operation, specifically long-term

assurance was requested. Nothing came out of that meeting.

The Company officials merely stated that they “knew of no plans

to close the Dallas margarine plant at that time.” Mr. Hawkins

also made the statement that he was opposed to even one man

transferring from Dallas to Denison, a remark which was oc-

casioned by the fact that one Dallas employee, Ray Daugherty,

had attempted to transfer to or be hired at Denison. Over a

month later, on December 3, Mr. Olsen wrote Daugherty re-

fusing the request, giving as his reason the fact that on Novem-

ber 21, 1974, the union had filed its formal grievance. Daugh-

erty’s request, however, had been pending since May 31, 1974.

The events which followed seemed anti-climatic, for the Com-

pany by now had succeeded in keeping the Teamsters Union

and the Dallas employees out of the Denison plant and had also

avoided giving them accurate information bearing on the fu-

ture of the Dallas operation and providing the “reasonable no-

tice and opportunity” required in Article 13(e) for the Dallas

employees to fill the replacement jobs which had already been

planned for Denison. The time for reasonable notice and op-

portunity had thus passed.

— A-36 —

On November 15, 1974, Holden wrote Williamson requesting

transfer rights to Denison for 30 employees whose names were

attached, and on November 21, 1974, the Union filed its formal

grievance and also resubmitted the 30 names stating: “The union

is requesting transfer rights for these people and any other em-

ployees at the Dallas plant who wish to transfer to the Denison

plant unless you can give us a firm answer that the Dallas em-

ployees will not be affected.” (Emphasis added.) Accordingly,

transfer rights, if applicable, would not be limited to the 30 em-

ployees who signed the petition attached to Holden’s letter of

November 15. The Union was bargaining agent for all of the

employees in the unit and its request and the “class action”

type request of the 30 named individuals was more than suf-

ficient to be applicable to all Dallas employees who desire

transfer.

The Company's position has remained inflexible, with the only

change being that it now places some reliance on the fact that

on May 22, 1975, an N.L.R.B. Certification of Bargaining Rep-

resentative was issued to the International Association of Ma-

chinists and Aerospace Workers, District 126, AFL-CIO (here-

inafter called IAM) for a production and maintenance unit at

the Denison facility. The record reflects that the IAM petitioned

for an election on December 6, 1974, and on December 20 the

[AM and the Company, over the Teamsters’ objections, waived

a hearing and entered into an agreement for Stipulation for Cer-

tification upon Consent Election, with the election set for Janu-

ary 23. The NLRB conducted the election and subsequent pro-

ceedings without benefit of an evidentiary hearing, relying ad-

ministratively on unsworn representations from the Company

that “the Denison plant is fully staffed,” although it only had 26

employees and several major manufacturing lines were yet to be

started up. Had the Board had the benefit of the information

contained in this arbitration record, it is quite likely that it would

have refused to hold the election among such an insufficient and

unrepresentative contingent of employees, and it is conceivable

ante MT ee

—perhaps even likely (since I have the benefit of this eviden-

tiary record and some hindsight) that the contract-bar doctrine

would have been applied—based on the Denison plant being

simply a new and enlarged version of the Dallas plant that was

already under contract with the Union herein. The representa-

tional egg has been scrambled, however, and it is not my province

to unscramble it. All of the rights which I find herein are based

upon the Company’s breaches of contract which occurred prior

to the filing of the IAM’s petition.

Notwithstanding its original intention to operate the Denison

plant non-union, the IAM petition and its not-surprising victory

in the election (which the Company apparently did nothing to

discourage since the Dallas employees were not allowed to vote)

seemed useful and perhaps even welcome to the Company. (But

I make no such finding, for the Company attitude toward the

IAM or the election has no bearing on this case.) The Company

has tried to obtain some legal advantage from the IAM certifi-

cation. Certification was issued on May 22, 1975, and the Com-

pany and the IAM quickly reached an agreement on a contract

dated June 8, 1975. The wage rates in that agreement appear

to be significantly lower than comparable rates in the Dallas

Teamster agreement, although I make no absolute finding to

that effect. The point is relevant only to show a possible eco-

nomic advantage to the Company in not dealing with the in-

cumbent Dallas Union.

On September 2, 1975, the Company finally announced the

closing of the Dallas margarine plant. The notice said opera-

tions would cease at the close of business on October 3, 1975.

The Union sought to reopen the record, but this was opposed by

the Company. The record was reopened for the limited purpose

of receiving the notice, which reads as follows:

— A-38 —

September 2, 1975

To: DALLAS MARGARINE PLANT EMPLOYEES

MEMBERS OF TEAMSTER LOCAL 767 ©

We regretfully must inform you of Standard Brands’ de-

cision to permanently cease operations at the Dallas mar-

garine plant at the close of business on October 3, 1975.

Our national margarine sales volume during 1975 is down

significantly from 1974 levels. This is a reversal of a pat-

tern of growth that continued for many years. It now ap-

pears to be unreasonable to expect any significant improve-

ment in our margarine sales volume and this coupled with

our utility service (refrigeration and steam) problems in

Dallas force us to the realization that we are no longer

able to sustain the Dallas margarine plant.

We have met with your union representatives this morning

and have informed them of the necessity for this decision.

We are pleased to be able to inform you, as we informed

your representatives, that we are able to offer all of our

regular employees at Dallas margarine the opportunity to

transfer to our other margarine plants located in Denison,

Texas and Indianapolis, Indiana. These are the plants to

which we will be transferring the production presently being

performed here at Dallas. Copies of the labor contracts

covering production employees at these plants are available

upon request.

Employees accepting transfers to either of these two loca-

tions who have not completed their vacations, will be given

lump sum payments for all unused vacation time.

The Company further recognizes its obligations under Part

I, Section 13 of the National Agreement, and has informed

your union representatives of its willingness to sit down

immediately to discuss these obligations.

— spe

On behalf of Standard Brands, we wish to personally thank

you for your past service and wish you the best of luck in

the future whether or not you elect to remain with the

Company.

D. R. Williamson

I make no finding regarding the alleged transfer of work to

Indianapolis, for there is no competent evidence to support the

Company’s self-serving statement to that effect, and the evidence

in the record would indicate that such disposition is unlikely.

I likewise do not rely on other self-serving statements as to the

reason for the closing. The Company does admit transfer of

work to Denison, which is supported by the record herein. Hav-

ing opposed reopening of the record regarding this notice, the

Company is not in a position to complain about the absence of

a finding concerning Indianapolis. I do find that the record

indicates there is no reason—unless it be motivated by an anti-

union desire to avoid the effect of Section 13(e)—to transfer

Dallas production anywhere except Denison.

CONCLUSION

I have purposely set out most of the material facts in some

detail, for the evidentiary basis for the conclusions herein should

be fully understood. I find and hold that the Company has vio-

lated the collective bargaining contract in several major respects.

Accordingly the grievance will be sustained.

The Company had an obligation under the contract and

under the law to recognize the Union and deal with it in good

faith regarding disputes for which the contract provides reme-

dial procedures. The failure to deal openly with the union, the

failure to provide honest and necessary information as to the

Company’s intentions and plans for the Dallas plant and the

effect which the Denison plant would have on the employment

status of the Dallas employees, the unexcused delays in re-

— A-40 —

sponding to the Union’s requests, and the Company’s refusal

to engage in meaningful negotiations, constituted violations of

Part VIII, Section 1 of the contract. The standard for dealing

with the Union under that clause, except insofar as the con-

tract specifically forecloses dealing, which would not be the

case here, is comparable to that required under Section 8(a)

(5) of the National Labor Relations Act. This construction is

reinforced by Part I, Section 15(b) of the contract, which

stresses that “complete and adequate remedy is provided by

the terms of this Agreement.”

Had the Company dealt openly with the Union and pro-

vided accurate information instead of we-have-no-plans-at-this-

time responses—adequate and honest disclosures heing required

under the law (see the United States Supreme Court decision

in NLRB v. Acme Industrial Co., 385 U.S. 432 (1967); cf.

NLRB vy. Truitt Mfg. Co., 351 U.S. 149 (1956)— it is reason-

able to assume that the parties would have negotiated and

resolved their differences while protecting job and contract

rights which the Dallas employees had accumulated, some for

more than 30 years.

The naive approach which the Company asks the Arbitrator

to apply to Section 13 would make a mockery of the substan-

tial rights which the Union negotiated for the employees in

Section I3(e). The Company contended through witnesses and

counsel that if a plant was in existence, even though new, a

transfer of work to it from another plant only required notice

under Section 13(a) and no carrying of preferential job rights

by the transferring employees. The plain meaning of Section

13(e) cannot be so easily manipulated. Transfer of work “per-

manently” to a “new” plant refers to an opening and closing,

but it is unrealistic to require that the opening and closing

occur at exactly the same time. It is sufficient that the Denison

plant was built as a replacement for and an expansion of the

Dallas plant, and the evidence so indicates. Even if the Com-

pany had delayed introducing stick margarine lines into the

ne

— | een

new plant for good faith reasons, which I do not find to be

the case here, the Dallas employees would still have rights,

within a reasonable period of time, to have Denison treated

as a new operation rather than an existing operation. Other-

wise the protective language of Section 13(e) would be ren-

dered ineaningless, dependent either on the convenience of the

Company or the fortuitous circumstances that opening and

closing days would occur simultaneously. I therefore find that

the Company violated Section 13(e) by not giving the Dallas

employees reasonable notice and the opportunity to fill jobs

at the Denison plant. The contract may be read as referring

to the entire operation at Denison, including jobs which the

Dallas employees had not previously performed. However, since

there are already employees assigned to those jobs and neither

they nor the IAM participated in this proceeding, I do not

make a finding in this case that the Dallas employees have a

right to displace any employee presently engaged in soft-mar-

garine or closely related operations at the Denison plant;’ this

finding will be without prejudice to a construction of Section

13(e) in some other fact situation. But unquestionably the

Dallas employees have rights to perform jobs in stick and bulk

margarine manufacture and related operations of the type be-

ing performed at Dallas. Operation of both Benhil and Mor-

pak equipment would be of that type.

The Company also violated Section 8(f), for the contract

contemplated good faith negotiations as to transfer and plant

closing problems, and such negotiations were foreclosed by

the Company positions and actions.

Perhaps at the root of the problem is the Company’s viola-

tion of Part I, Section 14(e), which I find to have occurred in

that the Company discriminated against the Dallas employees

because of their Union membership and activities, a violation

which would be comparable to an unfair labor practice under

Section 8(a)(3) of the N.L.R.A. It was undisputed that the

Company intended to operate Denison non-union, and it espe-

— A-42 —

cially tried to operate it without the Teamsters Union and its

contract. This resulted in discrimination against the Dallas

employees who were represented by: the Teamsters. To thi

end, the Company gave false information, concealed information,

and even hid equipment, to avoid giving knowledge of what

was an established fact—that from the very beginning and at

all times material hereto the Denison plant was intended as the

successor plant to the Dallas plant, and that its production was

intended to duplicate and therefore to displace the Dallas pro-

duction. I find that but for the Union and its contract, it is un-

reasonable to infer that on formal opening day, November 1,

1975, at least four lines, including two Benhil stick margarine

lines, would have been operating at the Denison plant. The

Dallas employees who desire to transfer to Denison are there-

fore entitled to have their Denison seniority begin on the first

working day any production or maintenance employee began

work in Denison. The evidence indicates that such day fell in

the latter part of October, 1974.

I also find that the seniority provisions of the contract were

violated by the Company’s actions. I shall not describe these

violations in detail, however, because I am not holding the

entire collective bargaining contract, with accumulated seniority,

applicable to the Denison plant. Such a holding may have

been appropriate before the egg was scrambled, but in view of

the interest of the present Denison employees and the IAM

I make no such holding and provide no such remedy.

AWARD AND REMEDY—

For the reasons outlined above, the Union’s grievance is

sustained. ~

What is an appropriate remedy? I have tried to balance the

contract rights of the Dallas employees with the interest of

the present Denison employees who are wholly innocent in this

—~

proceeding. Had the Company not violated the agreement

initially, the Teamster’s Union, probably under the same con-

tract, would most likely be the bargaining representative of the

Denison employees, who would have been mostly former Dallas

employees—the iecord indicates that most of them would have

accepted transfer. I will not so order, however. Nor will I

order the Company to displace any present employee. As well

as violating other provisions, the Company did violate the con-

tractual counterpart of Section 8(a)(3) of the National Labor

Relations Act, for which affected employees would be entitled

to be made whole as to their losses. So far, however, there

have been no losses; what we are concerned with are future

rights and the avoiding of losses. Accordingly, subject to the

limitations noted below, I hold that all Dallas employees who

desire to transfer may do so and that they will acquire new

seniority based upon the first working day at the Denison plant

(a day in late October, 1974, as described hereinabove), and

their relative positions on the seniority roster (for all Dallas

transferees will now have the same seniority date) will be based

upon length of service with the Company. The Company will

be required to provide suitable employment at the Denison

plant, beginning the first regular work day following the termi-

nation of their employment at the Dallas plant, to as many

of those Dallas transferees as are required for the operation of

stick or bulk margarine operations, provided however that such

operations shall include at least two lines using Benhil equip-

ment or the equivalent. If additional operations are added,

such a [sic] Morpak lines, with or without whipped or bulk mar-

garine production, any Dallas employees not otherwise assigned

shall be assigned to these jobs before employment if [sic] offered

to anyone else. And if vacancies occur in other production or

maintenance jobs at the Denison plants, such jobs are to be

filled by Dallas transferees so long as they are available and

qualified to do the work. If there are any persons from the

Dallas plant desiring to transfer in excess of those required

for the aforesaid jobs, such persons shall be placed on a prefer-

— A-44 —

ential hiring list and shall have the rights of employees on

permanent layoff under the contract herein.

It is recognized that the addition of these several manu-

facturing lines and newly transferred employees will materially

alter the bargaining unit at Denison and that eventually the

NLRB will have to determine the resulting questions concern-

ing representation. Until that time, however, the provisions of

the present Teamster contract will govern the compensation and

other benefits of the employees performing work of the

same nature as the Dallas operations. Such contract, how-

ever, will not govern any other job in the plant even though

such job may be filled by a Dallas transferee, for such job

would logically be covered by the IAM contract.

The parties are further required to appoint their representa-

tives under Part I, Section (j) as promptly as possible for the

purpose of implementing transfer and related rights provided

by Section 13, as interpreted by this Award. I shall retain

jurisdiction over the parties and subject matter of this grievance

pending compliance with this Award.

POSTSCRIPT—

A personal note. Labor Arbitration usually occurs between

parties to a viable collective bargaining relationship, and accord-

ingly the hearing and the awards are tolerable and generally

not unpleasant. I would have preferred that this case could

have fallen within that norm. I regret the necessity for making

sharp and specific findings which touch so closely on funda-

mental attitudes toward union-management relations. But I

felt I had no choice, considering my obligation to the contract,

other than to make the findings which were so ineluctably re-

quired by the evidence. It is my sincere hope, however, that

neither party will seek undue advantage and that both parties

- + = ow te

— A-45 —

will seek to establish a viable relationship based on mutual

trust. I say this without prejudice to the rights of the em-

ployees to select any representative of their own choice, but

this unsolicited advice should also apply to any union which

the employees should choose as their representative.

/s/ Charles J. Morris

Charles J. Morris

Arbitrator

Dallas, Texas

September 20, 1975

— A-46 —

DISTRICT COURTS’ FINDINGS OF FACT AND

CONCLUSIONS OF LAW

Northern District of Texas

(Filed October 16, 1975)

The application for preliminary injunction of General Ware-

housemen and Helpers, Local 767, affiliated with International

Brotherhood of Teamsters, Chauffeurs, Warehousemen and

Helpers of America (hereinafter “Teamsters”) came on for con-

sideration before the Honorable Robert M. Hill, United States

District Judge. Having heard the evidence and arguments and

having considered the briefs and stipulations of the parties, the

court makes the following findings of fact and conclusions of

law.

Findings of Fact

1. The plaintiff is a labor union who seeks to enforce a labor

arbitration award rendered pursuant to a collective bargaining

agreement between the parties.

2. At the hearing before this court held on Friday, October

10, 1975, the parties stipulated to facts that provide the back-

ground for the present action. The stipulation was admitted

into evidence as Defendant’s Exhibit No.1. The court has con-

sidered the facts stipulated therein and adopts them as findings

of fact. The stipulation without its exhibits is attached. Also

attached is the arbiter’s award.

3. A portion of the arbiter’s award ordered the company to

afford the Dallas transferees, if any, the wages and benefits

outlined in the Teamster contract in effect in Dallas until such

time as the National Labor Relations Board (hereinafter

NB I

—S

“NLRB”) could determine “the resulting question concerning

representation.” (Arbitration Award, page 43).

4. The wage scales in the Dallas Teamsters contract are sub-

stantially higher than those in the IAM contract in Denison.

Conclusions of Law

1. The court has jurisdiction of this cause pursuant to the

provision of the National Labor Relations Act, 29 U.S.C. § 185.

2. The company has agreed to comply with the arbiter’s

award with the exception of one provision; therefore, the court

limits its consideration to the disputed issue of whether that

portion of the arbitration award that gives the Dallas trans-

ferees the rights and wages contained in the Dallas Teamster

contract is enforceable even though the NLRB has recognized

the IAM as the exclusive bargaining agent for the Denison em-

ployees in this unit.

3. Before the court can issue injunctive relief the plaintiff

must establish the likelihood that it will ultimately prevail on

the merits, a requirement which varies with the degree of

threatened irreparable harm. Canal Authority of State of Florida

v. Calloway, 489 F.2d 569 (Sth Cir. 1974); State of Texas v.

Seatrain International, S.A., 518 F.2d 175 (5th Cir. 1975).

4. To prevail on the merits of this proceeding the plaintiff

is obliged to show the arbiter’s award was within the scope of

his authority.

5. To be within the scope of the arbiter’s authority the arbi-

tration award must be firmly based upon the terms and pro-

visions of the collective bargaining agreement. Furthermore,

the court is of the opinion that the arbiter exceeds his authority

if his award conflicts with the jurisdiction exercised by the

NLRB. It is this later requirement upon which plaintiff's appli-

cation flounders.

—

6. The arbiter ordered not only that jobs be available to Dal-

las employees who wished to transfer to similar jobs in the Deni-

son plant bui also that the “. . . the provisions of the present

Teamster contract will govern the compensation and other bene-

fits of the employees performing work of the same nature as the

Dallas operation.” (Arbitration Award, page 42). This portion of

the arbiter’s decision appears to conflict with the NLRB’s certifi-

cation of the International Association of Machinists and Aero-

space Workers Union as the exclusive bargaining agent for “all

production and maintenance employees employed by the em-

ployer at the Denison, Texas facility . . .” (Exhibit No. 9 to

stipulation). Pursuant to the certification, IAM and Standard

Brands negotiated a contract whose terms are apparently in

conflict with the Teamsters contract governing the Dallas em-

ployees’ rights. Although the court need not now make a final

determination that the award does so conflict, enough doubt

has been raised to prevent plaintiff from being able to make the

requisite showing that it is likely to prevail on the merits.

7. Both sides have urged the applicability of Carey v. West-

inghouse Electric Corp., 375 U.S. 261 (1964). The court is of

the opinion that the Carey decision does not dictate the result

in this case. The crucial fact here, but not present in either

Carey or in /nternational Brotherhood of Firemen and Oilers v.

International Association of Machinists, 338 F.2d 176 (Sth Cir.

1964), in the case sub judice is that the NLRB has already

acted. The controlling issue is whether the arbiter’s decision

conflicts with the NLRB’s decision.

8. The application for a preliminary injunction to enforce the

arbitration award should be denied. This determination applies

only to the enforceability of the provision dealing with the ap-

plicability of the Teamster contract to the Denison employees

and does not reflect upon the company’s duty to comply with

the award in other respects about which there is no present con-

troversy and is without prejudice to the plaintiff's right to seek

— A-49 —

injunctive relief from this court should the company fail to

comply with the award about which there is no controversy.

9. Employees desiring to work at the defendant’s Denison

margarine plan shall be required to advise the defendani at

least twenty-four (24) hours in advance of the time they desire

to report for work so that the defendant may schedule them

for work; provided that any individual desiring to transfer to

the Denison plant shall make his/her intentions known to the

defendant by telephoning either its plant manager, James Wind-

land, or Ellie Pricbel at area code 214-465-8901 between 8:00

a.m. and 4:00 p.m. no later than 12:00 noon on Wednesday,

October 22, 1975.

10. Any finding of fact deemed a conclusion of law is so

adopted and any conclusion of law deemed a finding of fact is

so adopted.

Dated this 16th day of October, 1975.

/s/ ROBERT M. HILL

United States District Judge

— A-50 —

ORDER

(Filed October 17, 1975)

On this date came on for hearing the application of General

Warehousemen and Helpers, Local 767, affiliated with Inter-

national Brotherhood of Teamsters, Chauffeurs, Warehousemen

and Helpers of America for a prelitninary injunction and the

Court, having heard the arguments and evidence, and having

considered the briefs and stipulations of the parties, is of the

opinion that the requested relief must be denied. It is, therefore,

Ordc: A, that the application of General Warehousemen and

Helpers, Local 767, affiliated with International Brotherhood

of Teamsters, Chauffeurs, Warehousemen and Helpers of Amer-

ica be, and the same is, hereby denied.

Signed and Entered this 17th day of October, 1975.

/s/ ROBERT M. HILL

Judge

— A-51 —

DISTRICT COURT OPINION AND JUDGMENT

Order

(Filed February 18, 1976)

This action came on for hearing before the court on Janu-

ary 25, 1976, the Honorable Robert M. Hill, United States

District Judge, presiding. Earlier hearings in this matter on

plaintiff's motion for a preliminary injunction were held on

September 3, 1975, and October 11, 1975. Pursuant to Rule

65(a)(2) F.R.C.P. the court has considered the transcript of

those hearings and the evidence admitted at that time. After

consideration of all the evidence and the arguments of counsel,

the court is of the opinion that the court’s findings, filed Octo-

ber 16, 1975, after the hearing on the preliminary injunction,

are correct and are hereby adopted as the court’s findings in

this cause as amended or supplemented by the additional find-

ings that follow.

It is necessary to deal first with defendant’s motion to dis-

miss. The court is of the opinion that the motion should be

overruled. Defendant asserts three grounds for its motion. First,

defendant argues that the matters asserted by plaintiff are within

the primary jurisdiction of the National Labor Relations Board.

Plaintiff seeks to enforce an arbitration award rendered in its

favor by Charles J. Morris who found that the defendant vio-

lated its collective bargaining agreement with the plaintiff when

it moved a margarine manufacturing facility from Dallas to

Denison. It must be noted that the arbiter found defendant's

conduct to be an egregious and willful violation of the contract.

Although the NLRB has been involved in matters related to

this case and although the possible conflict between that agency’s

rulings and the arbiter’s award is at the nub of the dilemma in

this case, the court is of the opinion that the question of whether

— A-52 —

to enforce the award is one that is properly before the court

and not within the NLRB’s primary jurisdiction. Similarly, the

court is of the opinion that this precise issue was not properly

before the NLRB at a previous time, and therefore the defend-

ant’s contentions that principles of res judicata bar plaintiff's

cause are without merit.

The third ground for dismissal is the plaintiff's failure to join

the International Association of Machinists (IAM), the union

certified to represent the Denison plant employees. Although

the joinder issue in this case is troublesome, the court is of the

opinion that under the unusual circumstances presented the

IAM or the Denison employees were not indispensable parties

so as to require dismissal of this cause.

Findings of Fact

The court makes these additional findings of fact:

1. One employee from the Dallas plant transferred to Deni-

son and is working under the IAM contract. Other Dallas

employees are still available and ready to transfer if the Dallas

wages and benefits were in effect.

Conclusions of Law

The court is of the opinion that the arbiter exceeded the

scope of his authority since his award is in conflict with the

NLRB’s certification of the IAM in Denison. Plaintiff argues

that it does not contest the certification and that the arbiter’s

award was a proper contract remedy for violation of the col-

lective bargaining agreement, but the plaintiff's view of the

effect of certification is too narrow. The arbiter clearly recog-

nized that his award would lead to employee frictions that the

NLRB would oversee. It would have been proper for the arbiter

— A-53 —

to order the company to pay money damages or to require the

defendant to hire the Dallas employees, but he took the further

step of specifying wages and working conditions after the NLRB

had certified the IAM as the exclusive bargaining agent for the

Denison unit. That certification has now withstood an appeal

to the NLRB. It is the court’s opinion that the arbiter’s action

in this regard conflicts with NLRB certification; therefore, the

award cannot be enforced. Since the award is not enforceable

the plaintiff is not entitled to damages, if any were sustained,

for the defendant’s failure to comply with the order.

The court:is not unmoved by the employees’ situation. As

noted previously, the arbiter found a willful pattern of conduct

on the company’s part to deprive the Dallas employees of their

rights and benefits pursuant to the Teamster’s contract. The

court is not at liberty to retry the matters before the arbiter

and has accepted his findings. The court does not condone the

company’s conduct. There are nevertheless inherent problems

with the award fashioned by the arbiter that make it impossible

to enforce without impinging upon the NLRB’s jurisdiction.

Dated this 18th day of February, 1976.

/s/ ROBERT M. HILL

United States District Judge

— A-54 —

In the United States District Court

For the Northern District of Texas

Dallas Division

General Warehousemen and Helpers, )

Local 767, Affiliated With Interna- 7

tional Brotherhood of Teamsters,

Chauffeurs, Warehousemen, and

Helpers of America, Civil Action

Plaintiff, {| No. CA-3-75-1216-D

v.

Standard Brands, Inc.,

Defendant. }

JUDGMENT

(Filed February 18, 1976)

This action came on for trial before the court, the Honor-

able Robert M. Hill, United States District Judge, presiding.

The issues having been duly tried and a decision having been

duly rendered,

It is Ordered and Adjudged that the plaintiff's request for

injunctive relief be denied, that the plaintiff take nothing on its

damage claims, that the action be dismissed on the merits, and

that the defendant Standard Brands, Inc., recover of plaintiff

General Warehousemen and Helpers, Local 767, its costs of

action.

Dated this 18th day of February, 1976.

/s/ ROBERT M. HILL

United States District Judge

ee

— A-55 —

General Warehousemen and Helpers, Local 767, Affiliated

With International Brotherhood of Teamsters, Chauffeurs,

Warehousemen and Helpers of America,

Plaintiff-Appellant,

Vv.

Standard Brands, Inc.,

Defendant-Appellee.

General Warehousemen and Helpers, Local 767, Affiliated

With International Brotherhood of Teamsters, Chauffeurs,

Warehousemen and Helpers of America,

Plaintiffs-Appellants-Cross Appellees,

V.

Standard Brands, Inc.,

Defendant-Appellee-Cross Appellant.

Nos. 75-3797, 76-1579

United States Court of Appeals

Fifth Circuit

October 11, 1977

' Rehearing En Banc Granted

December 15, 1977

Before TUTTLE, WISDOM and COLEMAN, Circuit

Judges.

TUTTLE, Circuit Judge:

This case requires us to sound the treacherous waters in

which judicial power and NLRB authority overlap and some-

ee SO ee en

— A-56 —

times conflict. Appellant, a Teamsters local, seeks to enforce

an arbitration award in its favor. Ordinarily, such awards are

readily enforced. But the district court held that this award

conflicted with a prior NLRB decision and hence could not

be ordered into effect. The Teamsters have appealed; Standard

Brands, the employer, has cross-appealed, asserting additional

bases for refusing to enforce the award.

I. THE HISTORY OF THE CASE

Our perception of this case is inescapably—and properly—

influenced by the facts. Certain background points are not

controversial. On October 3, 1975, Standard Brands perma-

nently closed its Dallas margarine plant, which it had operated

since as early as 1943. In the early 1970s, Standard had begun

looking for a new plant site in the Dallas vicinity, and in 1973

it selected a tract of land in Denison, Texas—some 75 miles

from Dallas. According to the arbitrator, the new plant went

into operation in late October 1974 and formally opened on

November 1, 1974.

On the day the plant opened, the Teamsters, who represented

the employees of the Dallas plant, filed a grievance which as-

serted that the operation of the new plant would result in the

closing of the old one, and sought to protect the contractual

rights of the Dallas employees in that event. The arbitrator

did not reach a decision in the case until shortly after the com-

pany announced the closing of the Da!las plant, an event which

surely influenced his view of the case. He concluded that the

Company had

discriminated against the Dallas employees because of

their Teamsters Union membership and activities. . . .

It was undisputed that the Company intended to operate

Denison non-union, and it especially tried to operate it

without the Teamsters Union and its contract.

ee

— A-57 —

This conduct violated a non-discrimination clause of the

Contract (Part I, Section 14(e)). In the arbitrator’s judgment,

the company’s conduct also violated the Dallas employees’ right

to reasonable notice and an opportunity to fill jobs at the Deni-

son plant when their work was transferred there (Part I, Section

13(e) of the Contract); and failed to comport with the contrac-

tual recognition of the Teamsters as the Dallas bargaining agent

(Part VIII, Section 1).

These findings convinced the arbitrator of the necessity for

a thoroughgoing remedy. His award had several features: (1)

Dallas employees were ensured a right to transfer to certain

jobs in Denison; (2) the transferees to Denison were given

“super-seniority,” based on the first day of Denison operations

rather than the first day of their work in the new plant; (3) the

former Dallas workcrs’ “compensation and other benefits” at

Denison would conform to the Dallas contract.! This third

element, the introduction of the Dallas contract terms to gov-

ern Denison work, was not to be permanent. The arbitrator

believed that the addition of these several manufacturing lines?

and newly transferred employees would materially alter the

bargaining unit at Denison and . . . eventually the NLRB

will have to determine the resulting conditions concerning rep-

resentation.” The Dallas contract would apply only until that

time.

Standard Brands discerns a conflict between this award and

an NLRB certification of a different union, the International

1 The arbitrator’s award can be read to apply the Dallas contract

terms even to Denison employees who never worked at Dallas, but

who perform work once carried out there. If the arbitrator meant

to order any such changes in the terms of non-Dallas employees

work, the Teamsters have not sought to enforce this aspect of his

award.

2 There is some suggestion in the arbitrator's decision that he

meant to order the company to begin uction in the Denison

plant of certain t bmg yee similar to margarine formert

made in Dallas. parties not discuss the propriety of s

an order and I do not consider it.

—_

Association of Machinists, as the exclusive bargaining agent

of the Denison employees. The IAM’s organizing campaign

had begun as soon as the new plant opened. Within a short

time, on December 6, 1974, the LAM was able to file an elec-

tion petition with the NLRB. The Teamsters were permitted a

limited form of intervention in the proceedings on this petition,

but the Dallas employees were not allowed to vote in the Deni-

son election. The IAM won the election by a vote of 19 to 4,

and, on appeal, the NLRB confirmed the resulting certification

of the IAM. In short order, the [AM and Standard Brands

reached agreement on a contract of which the arbitrator wrote,

“The wage rates in that agreement appear to be sig-

nificantly lower than comparable rates in the Dallas Texas

agreement, although I make no absolute finding to that

effect.”

Although the Teamsters later sought to reopen the representa-

tional proceedings on the basis of the arbitrator's findings and

award, the NLRB rejected this move.

[1] The district court concluded that the award did conflict

with the NLRB certification, and therefore could not be en-

forced. The court’s first action was to deny the union a pre-

liminary injunction enforcing the award.* At that time, it was

the court’s understanding that the company had agreed to com-

ply with -all portions of the award except the provision apply-

ing the Dallas contract at Denison. Similarly, the district court’s

final conclusions of law discuss only the unpropriety of the

arbitrator’s attempt to specify wages and working conditions

at the Denison plant. It had become clear, however, at the

subsequnt hearing on the union’s request for a permanent in-

junction, that the company was also resisting enforcement of

the “super-seniority” aspect of the award. Moreover, although

the company did offer to let Dallas employees transfer to Deni-

* The union appealed the denial of the preliminary injunction, in

No. 75-3796, but concedes that this appeal is now moot.

2 ee

— A-59 —

son, it did not offer to pay them according to the Dallas con-

tract. Since the arbitrator’s award in effect required the latter,

more generous offer, the transfer issue was unresolved as well.

The district judge suggested at the permanent injunction hear-

ing that the seniority and transfer issues would only become

pressing if our Court reversed on the question of wages. We

conclude that all of these elements of the award are still be-

fore us.‘

II. THE COURTS AND THE NLRB:

CONFLICT OR OVERLAP

The district court refused to enforce the arbitrator’s award

on the theory that it conflicted with an. NLRB certification.

The NLRB, however, had not and still has not declared en-

forcement of the award to be an unfair labor practice. Thus,

the district court of necessity reached its own conclusion about

the significance of the certification of the IAM. The principal

constraint against such judicial interpretation of the Board’s

actions is the well-established principle that the Board is the

authority primarily responsible for the administration of the

National Labor Relations Act. In its broadest terms, this re-

quirement has been seen as precluding original judicial pro-

ceedings wherever the conduct under scrutiny is arguably pro-

hibited or permitted by the NLRA. San Diego Building Trades

Council v. Garmon, 359 U.S. 236, 245, 79 S.Ct. 773, 3 L.Ed.

2d 775 (1959).

4 Standard Brands contends that the arbitrator’s award is itself

now moot. The arbitrator expressly indicated that his award of Dal-

las compensation and other benefits would be effective only until

the NLRB dealt with the representational issues generated by his

award, and, in Standard Brands’ view, the NLRB resolved these

questions by adhering to its certification of the IAM even after the

arbitrator’s opinion had been submitted for its consideration. But

the Teamsters correctly point out that the arbitrator contemplated

a resolution of representational questions which would arise after

compliance with this award. Since compliance with the award has

not yet been obtained, mootness is also absent.

— A-60 —

[2,3] This principle, of course, does not mean that the

NLRB defines the entire system of law regulating labor rela-

tions. Labor relations are commonly also governed * / a con-

tract or collective bargaining agreement, and enforcement of

these agreements can be carried out by the federal courts under

§ 301 of the NLRA, 29 U.S.C.A. § 185(a). In particular,

courts have the authority to enforce awards entered in con-

tractual arbitration proceedings, even when the conduct under

scrutiny could also be the subject of an unfair labor practice

charge before the National Labor Relations Board. See Smith

v. Evening News Association, 371 U.S. 195, 197-98, 83 S.Ct.

267, 9 L.Ed.2d 246 (1962); Teamsters Local 174 v. Lucas

Flour Co., 369 U.S. 95, 101 n.9, 82 S.Ct. 571, 7 L.Ed.2d 593

(1962). The Supreme Court has given its imprimatur to judi-

cial action under section 301 even in the context of an inter-

union “jurisdictional” dispute, which—like the present case—

perhaps involved the issue of which union should represent a

workforce. Carey v. Westinghouse Electric Corp., 375 U.S.

261, 84 S.Ct. 401, 11 L.Ed.2d 320 (1964).°

[4, 5] So long as the courts exercise this broad power under

section 301, they may be asked to enforce arbitration decisions,

presumably justified as far as the parties contract is concerned,

which violate the National Labor Relations Act. It is clear that

a court will not enforce an arbitral decision that conflicts with

an NLRB decision. See Carey, supra, at 272, 84 S.Ct. 401;

New Orleans Typographical Union v. NLRB, 368 F.2d 755,

767 (Sth Cir. 1966). Similarly, courts have declared that a

5 Standard Brands contends that the dispute before us properly

falls within the exclusive or primary jurisdiction of the NLRB. We

reject this contention. While there may be section 301 cases where

courts should refrain from taking jurisdiction, see Smith v. Eve-

ning News Association, supra 371 U.S. at 197-98, 83 S.Ct. 267; cf.

United Steelworkers v. American Int'l Aluminum Corp., 334 F.2d

147, 153 (Sth Cir. 1964), cert. denied, 379 U.S. 991, 85 S.Ct. 702,

13 L.Ed.2d 611 (1965), we believe that respect for the NLRB’s

— responsibility compels, rather than precludes, decision of

this case.

— A-61 —

conflict between the promises of a contract and the demands of

a statute would preclude ordering arbitration under the con-

tract or enforcement of an arbitration award. See United Steel-

workers v. United States Gypsum Co., 492 F.2d 713, 734 (Sth

Cir. 1974) (claimed violation of 29 U.S.C. § 186(a)); Associ-

ated Milk Dealers, Inc. v. Milk Drivers Local 753, 422 F.2d 546,

553 (7th Cir. 1970) (arbitration would not be ordered if clause

to be interpreted by arbitrator violated antitrust laws); Nursing

Home Union Local 1115 v. Hialeah Convalescent Home, 348

F.Supp. 405, 411 (S.D.Fla. 1972) (inescapable conflict with

national wage-price control policy would be bar to arbitration).

Cf. Todd Shipyards Corp. v. Marine Workers Local 39, 344

F.2d 107 (2d Cir. 1965) (finding § 301 jurisdiction over em-

ployer’s suit for declaratory judgment that contract clause vio-

lated NLRA, and for injunction against arbitration; injunction

denied ).

In the case before us, however, there is no facial, indisputable

conflict between the arbitrator’s award and NLRB action. The

NLRB has certified the IAM as the representative of the Denison

employees. The arbitrator’s award manifests his effort not to

create a conflict with this certification. He commented that

“The representational egg [at the Denison plant] has been scram-

bled . . . and it is not my province to unscramble it.” (R. 257).

Moreover, his provision for compensation and other benefits

in accordance with the Dallas contract expressly was to run only

until the NLRB dealt with the representational issues generated

by his award.

Moreover, the arbitrator’s decision has passed one test before

the NLRB. Standard Brands, in partial compliance with the

award, permitted one Dallas employee to transfer to Denison

with “superseniority.” On January 20, 1976, the IAM filed an

unfair labor practice charge with the NLRB because one of

the Denison employees had been “bumped” by this Dallas trans-

feree. The Teamsters intervened. The Machinists, in part to

— A-62 —

avoid giving the Teamsters yet another opportunity to attack

the Machinists’ certification, sought to withdraw the charge.

The NLRB Division of Advice concluded that the Machinists

should be permitted to withdraw the charge. One basis for the

Division of Advice’s reaction was the Machinists’ desire to drop

the matter. But the Division also commented that “the Em-

ployer’s actions in transferring a Dallas employee to Dennison

[sic] and applying Dallas seniority to him were considered to

have been in compliance with, and, therefore, privileged by the

arbitration award. [I]t cannot be said that this arbitral

award, as modified, unlawfully interferes with the Section 9(a)

rights of the Machinists in Dennison.” Standard Brands, Inc.,

1976-77 CCH NLRB 4 20,020 at p. 32,030.

The same NLRB memorandum, however, appears to question

the propriety of the award’s extension of Dallas contract terms

to Denison. The memorandum only approved of the award

“as modified”—an apparent reference to the decision by the

district court not to enforce the application of the Teamster

contract at Denison. Moreover, the Division commented that

“If the Circuit Court is being asked by the Teamsters

to apply other provisions of the Teamster contract to the

Dennison employees so that the Machinists’ certification

rights would be undermined, the Machinists may wish to

seek Board intervention. Such a request would be for-

warded to the Division of Litigation.” Jd. at n. 8.

Had the Board appeared in our case, its views would have re-

ceived careful consideration. In Boire v. International Brother-

hood of Teamsters, 479 F.2d 778 (Sth Cir. 1973), we affirmed

the grant of an NLRB request for a temporary injuaction against

any union efforts to secure compliance with an arbitrator’s award.

We indicated there that such requests should be granted so long

as the legal theories advanced to demonstrate the presence of

mr labor practices are not insubstantial or frivolous. Jd. at

Nl hd Se a ar ce

Jeane a

nw cee

Lm

— A-63 —

But in Boire the party seeking the injunction was the NLRB

itself. Unfair labor practice charges (and a unit clarification pro-

ceedings dealing with the same dispute) were already before the

Board, and its petition for an injunction was based on a statutory

provision, 29 U.S.C. § 160(/), which enables the NLRB to seek

preservation of the status quo while its evaluation of a case is

in progress. Boire, supra, at 784. It is one thing for a court to

refuse to enforce an arbitration award when the NLRB protests

that enforcement would impair Board processes. It is another

to “protect” the Board’s processes when no unfair labor practice

charge is presently pending and no request for a stay of enforce-

ment has been heard from the Board.®

In the posture of our case, we believe that we should not

readily withhold enforcement of an arbitrator’s award. To do

otherwise would require us to interpret the National Labor Re-

lations Act, a task which ordinarily is best left to the NLRB.

We might also further complicate the process by which this case

may finally be resolved. If we enforce the award, its inconsist-

ency with the Act can readily be tested in unfair labor practice

proceedings. If we do not enforce it, however, the Teamsters

cannot obtain relief by demonstrating to the Board that the

6 The NLRB has also obtained injunctions barring arbitration un-

der 29 U.S.C. § 160(/), which directs the Board to seek injunctive

relief where it has reasonable cause to believe there is a violation

of, inter alia, the “hot cargo” provisions of the NLRA. See Daniel-

son v. International Org. of Masters, Mates & Pilots, 521 F.2d 747

(2d Cir. 1975). As in Boire, as in Danielson, here the NLRB was

directly involved in, and adjudicating the merits of a controversy.

The Board also sometimes intervenes in lawsuits which originally

were contested only by private parties. See, e.g., Smith Steel Work-

ers v..A. O. Smith Corp., 420 F.2d 1, 6 (7th Cir. 1969); Teamsters

Local 542 v. Ace Enterprises, Inc., 332 F.Supp. 36, 38-39 (S.D.

Cal. 1971). See also Central Motor Express, Inc. v. General Drivers

Local 89, 407 F.Supp. 1217 (W.D.Ky. 1975) (postponing enforce-

ment of arbitration award in case NLRB might intervene). In these

cases, as in other instances of direct NLRB involvement, the courts

are left in no doubt as to the degree and direction of the NLRB’s

concerns.

a

company, by failing to comply with the award, is in violation of

its contract—for violations of contracts are not necessarily unfair

labor practices, and, if not, are not within the Board’s purview.

United Steelworkers v. American Int'l Aluminum Corp., 334

F.2d 147, 152 (Sth Cir. 1964), cert. denied, 379 U.S. 991, 85

S.Ct. 702, 13 L.Ed.2d 611 (1965). Most of the original actions

for which the union sought relief in the arbitration could have

been categorized as unfair labor practices—but the six month

statute of limitations on unfair labor practice charges, 29 U.S.C.

§ 160(b) has presumably already run on them.

Ill. THE PROPRIETY OF THE

AWARD IN THIS CASE

In light of our understanding of the limited judicial role in

lawsuits of this sort, we turn to the award in this case.

[6] Two portions of this award are apparently most contro-

versial. The first is the provision for transfer with superseniority;

the second is the application of the Dallas compensation and

other benefits to Denison work. It seems clear to us, however,

that we cannot refuse enforcement of the superseniority portion

of the award. The Division of Advice, after all, has already indi-

cated that the grant of superseniority may not be an unfair labor

practice at all.

Perhaps there is a critical distinction between the super-

seniority decision and the use of the Dallas contract to fix Deni-

son compensation. But it can hardly be contended that the

superseniority provision is altogether free of impact on the Deni-

son workforce, and thus not at all in tension with the IAM

certification. Unions bargain over seniority provisions; they

seek, naturally, to maximize the job security and work privileges

of those they represent. This goal is frustrated if another group

of employees can obtain preferred status. See generally In re

Arbitration Between UAW Local 259 and Kellogg Pontiac Sales

0. teks Mita

— A-65 —

Corp., 392 F.Supp. 1044 (S.D.N.Y.1975) (refusing to enforce

arbitral award which would have granted substantial number of

employees right to transfer to new work location pursuant to

union’s contract, since award conflicted with NLRB decision

that contract did not apply to new location, and with election

in which union was defeated).

Still, it is evident that the wages provision of the award is at

least an additional interference with the exclusive role in bar-

gaining over the terms of Denison employment which the IAM

ordinarily would exercise. An influx of Dallas Teamsters, paid

at higher rates than their Denison counterparts, surely would

cause jealousy and conceivably could undermine the IAM’s sup-

port. The IAM also might encounter problems in the next round

of negotiations, when the inequality in wages might have to be

resolved one way or another. See generally McGuire v. Humble

Oil & Refining Co., 355 F.2d 352, 357 (2d Cir. 1965).

The district court suggested that the arbitrator could have

validly ordered the company to pay damages to the Dallas em-

ployees. Such a remedy often would be a happy choice. A lump

sum award could, for example, compensate the Dallas em-

ployees for the breach of their contract, while leaving intact the

terms of the agreement governing Denison. We have approved

the payment of damages, based on the breach of an expired con-

tract and awarded in an arbitration conducted at the instance of

a decertified union. United Steel Workers v. United States Gyp-

sum Co., 492 F.2d 713 (Sth Cir. 1974). See also United States

Gypsum Co. v. United Steel Workers, 384 F.2d 38 (Sth Cir.

1967), cert. denied, 389 U.S. 1042, 88 S.Ct. 783, 19 L.Ed.2d

832 (1968). The Second Circuit has also intimated that it could

approve a damage award despite an NLRB decision precluding

other relief. Luckenbach Overseas Corp. v. Curran, 398 F.2d

403, 405-06 (1968); see In re Arbitration Between UAW Local

259 and Kellogg Pontiac Sales Corp., 392 F.Supp. 1044, 1050-

51 (S.D.N.Y.1975) (enforcing damages portion of award). The

— A-66 —

Ninth Circuit reached a somewhat similar conclusion in JBEW

Local 1547 v. Teamsters Local 959, 507 F.2d 872, 878-79 (9th

Cir. 1974).

Admittedly, the propriety of a damage award is not clearly

established. Some doubt might be cast upon it by Carey v. West-

inghouse Electric Corp., 375 U.S. 261, 84 S.Ct. 401, 11 L.Ed.2d

320 (1964). Carey upheld the propriety of resort to arbitration

to settle a work-assignment or jurisdictional dispute. But Justice

Douglas, writing for the Court, observed in dictum that:

“Should the Board disagree with the arbiter, by ruling,

for example, that the employees involved in the controversy

are members of one bargaining unit or another, the Board’s

ruling would, of course, take precedence; and if the em-

ployer’s action had been in accord with that ruling, it would

not be liable for damages under § 301.”

Id. at 272, 84 S.Ct. at 409.

Certain subsequent cases have followed the apparent implica-

tion of Carey, and refused to enforce damage awards where the

NLRB had decided the underlying work-assignment dispute.

See Ironworkers Local 395 v. Lake County, Indiana Council of

the United Brotherhood of Carpenters, 347 F. Supp. 1377 (N.D.

Ind.1972); Dock Loaders Local 854 v. W. L. Richeson & Sons,

Inc., 280 F.Supp. 402 (E.D.La.1968). These cases, however,

dealt with situations where the employer could not comply with

the arbitrator’s assignment of work without violating a specific

construction of the National Labor Relations Act by the NLRB.

Here, no such square conflict has been demonstrated. Thus, even

if employers can escape damage liability when their contractual

obligations conflict with statutory duties, a damage award in our

case would still be enforceable.

Here, to be sure, the arbitrator awarded wages and other bene-

fits, rather than simply damages. But the distinction between

the two in this case could be as much form as substance. At the

I eit rece hts Dimas oes etic

— A-67 —

time that the arbitrator issued his decision, the Dallas plant was

still open. Thus, no damages had been suffered. The potential

for damages would arise only if the Dallas employees were de-

nied work in Denison, or were paid less for it than they would

have received in Dallas. If their pay was less, the measure of

damages for the period of their employment at Denison would

be the difference in their wage scales. The arbitrator could have

ordered the payment of a lump sum at some time in the future,

or the payment at once of an estimate of what that lump sum

would be. Instead, he attempted to avoid the need for a damage

award by ordering the payment of Dallas wages and compensa-

tion. The precise effect of this order is to make the employees

whole for any losses they would have suffered. We believe it

can fairly be argued, therefore, that if transfer and supersen-

iority are proper, and damages are appropriate as well, then the

arbitrator’s order of wages and other benefits for the transferees

in accordance with the Dallas contract also can be squared with

the Board’s views.*

* In taking this stance, we recognize the apparent inconsistency be-

tween our approach and that of the Seventh Circuit in Local 7-210,

Oii, Chemical & Atomic Workers v. Union Tank Car Co., 475 F.2d

194 (7th Cir. 1973), cert. denied, 414 U.S. 875, 94 S.Ct. 68, 38

L.Ed.2d 120 (1973). In that case, an arbitrator had ordered Union

Tank Car Company to apply its agreement with the OCAW to cer-

tain operations once performed by the OCAW but subsequently

transferred to a plant covered by a contract with another union, the

Boilermakers. The court denied enforcement.

The court felt, and the OCAW conceded, that an NLRB decision

certifying the Boilermakers as exclusive bargaining representatives

precluded application of the OCAW contract at the new plant. But

the court also declined to enforce the arbitrator’s order that the com-

pany make the OCAW-represented employees whole for any lost

wages or monetary fringe benefits. Apparentiy the only contract vio-

lation which the arbitrators sought to remedy was the failure to apply

the OCAW contract to the new operations and the court viewed this

violation as immunized by the NLRB decision.

Whatever the philosophical differences between Local 7-210 and

the view we have taken here, the results in that case and our own

are not necessarily in conflict. The arbitrator in our case was careful

not to seek to impose the entire Dallas contract at Denison, and

— A-68 —

[7, 8] The arbitrator’s award, then, avoids a clear conflict with

the NLRB if it is viewed as essentially a make-whole award. We

therefore reject the district court’s conclusion that the possibility

of interference with the NLRB certification precludes enforce-

ment of the award.®

found a range of contract violations by Standard Brands quite apart

from the failure to apply the Dallas contract.

Standard Brands contends that Sperry Systems Mgmt. Div. v.

NLRB, 492 F.2d 63 (2d Cir. 1974), cert. denied, 419 U.S. 831,

95 S.Ct. 55, 42 L.Ed.2d 57 (1976), is also opposed to the result

we reach here. In Sperry, a union representing a New York unit

sought to apply its entire contract, with the exception of the provi-

sion for union recognition, to employees in California. The union

won an arbitration decision to that effect, but the company asserted

that efforts to enforce that decision constituted an unfair labor prac-

tice, and the Second Circuit agreed, vacating an NLRB dismissal of

the employer’s charge. The union had already lost a representation

electi

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