Petition — Hospital & Institutional Workers Union, Local 250 v. Pasatiempo Development Corp.

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80-967 (|- Fired

“. a) QEC 15 1980

“MICHAEL RODAK, JR., CLERI

eg

In the Supreme Court

OF THE

United States

Octoser Term, 1980

Hospitau AND InstiruTIonAL Workers Union, Loca 250,

Petitioner,

VS.

Pasat.EMPO DEVELOPMENT Corp.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

to the United States Court of Appeals

for the Ninth Circuit

Davi A. RosENFELD

Van Bourc, ALLEN, WEINBERG &

RoGER

875 Battery Street

San Francisco, CA 94111

Telephone : 864-4000

Attorneys for Petitioner

BOWNE-PERNAU WALSH * 1045 SANSOME ST. © S.F., CA 94111 © (415) 981-7882

> 33

QUESTION PRESENTED

May a union force a successor employer to arbitrate

the discharge of an employee under the grievance and

arbitration procedure of the predecessor’s collective bar-

gaining agreement which occurs during the interim be-

tween the assumption of the business by the successor and

the consummation of a new agreement?

lil

TABLE OF CONTENTS

Page

TRAE ON PMI APN oO i

a SLR OC ER MIR OTTO eS Cath 1

oe cc TE RE ATA Ih MO RE SE eT: 1

ee Ie Oe CI iis cee 2

Reasons why the writ should be granted ................. hitacauas 4

RNIN Peete tia ae DS et ys ued i 9

PREVIOUS PAGE WAS BLANK

lv

TABLE OF AUTHORITIES CITED

Cases

Page

American Sink Top & Cabinet Co. Inc., 242 N.L.R.B.

a , BARR RD cements oN RISO PL Aan, DO POLES MEER Na A 6

Boeing Co. v. Int’l Association of Machinists, 504 F.2d

Sik pea WSS areNtit ee MORN UU et oO 8

General Teamsters Local No. 249 v. Bill’s Trucking

Inc., 493 F.2d 956 (Srd Cir. 1974) ........2......cceecs-coccccocceee 7

General Warehousemen, Local 636 v. J. C. Penney Co.,

456 F Supp. 150 (CW. D. Pe. BOGD) on nccnccsccccccccctdecccecensses 7

Golden State Bottling Co. v. NLRB, 414 U.S. 168

UIP She BL shales ch soso onder ddachatais once Glas ee abba agostielipcadponnbcii 4)

The Hilton Davis Chemical Company, 185 N.L.R.B.

I I ihe daira cies ine ea 6

Howard Johnson Co. v. Detroit Local Joint Executive

ek | elmer DNR ENN ON ay OR 5, 8

I.B.E.W. v. Wadsworth Electric Manufacturing Co.,

240 F.Supp. 292 (ED. Kan. 1965) ..0..........2..c..cscccceseoe 7

Local 1115 Joint Board v. B & F Investments, 436

BF, Re Ct BU UY iseriscnheresicehocdeascoenciconpess 7

Milwaukee Typographical Union v. Madison News-

paper, 444 F.Supp. 1223 (W. D. Wise. 1978) .............. 7

Newspaper Guild v. Central States Publishing Co., 451

gp SRE BG 8 MW TD + | Renton epee nam ECNETE oe

NLRB v. Bachrodt Chevrolet Co., 468 F.2d 963 (7th

Cir. 172), remanded, 205 N.L.R.B. 784, enforced, 515

F.2d 512, cert. den. 423 U.S. 927 (1975) oo. 4

NLRB v. Burns Int’l Security Service, Inc., 406 U.S.

PRUE A URMEE, « Retenssdestivensnabscieel tee aiscbcadasicasites sdsicohcinssudilealanaas 4, 5, 6, 8

NLRB v. Edjo Ine, ...... Pe hms , 105 LRRM 3001

I MED. tixiihis tina teaptnteacrlasitierisataSuRealeuiescatncs 6

v

TABLE OF AUTHORITIES CITED

CASES

Page

Nolde Brothers, Inc. v. Local 358 Bakery & Confection-

ery Workers Union, 430 U.S. 243 (1977) 0000. 9

Oil, Chemical & Atomic Workers Int’l Union v. Ameri-

can Maize Products Co., 492 F.2d 409 (7th Cir. 1974),

CUTE. ee, SAT Fe, DO CIT assesses scen ene scssesiees 6

Proctor and Gamble Independent Union v. Proctor &

Gamble Manufacturing Company, 312 F.2d 181 (3rd

Cir. 1962), cert. den., 374 U.S. 830 (1963) ue. 6, 7

Teamsters Local 174 v. Lucas Flour Co., 369 U.S. 95

«RR TSE ASE ERE ARNE ee WR ROCA ne RE Ea 8

United Steelworkers v. Reliance Universal, Inc., 335

a I I I ic icssck nhatantdcicciniemledaanidnicinnmns 7

United Steelworkers v. United States Gypsum Co., 492

Be a EE RT ID occa de ecticcorttcdnciesecndensetimmatinibornnes 7, 8

Wackenhut Corp. v. Plant Guard Workers Union, 332

Se I UIs RODS orsdcccccesiesiactteninsoonsincodbenseestindeoens 7

Washington-Baltimore Newspaper Guild v. Washing-

ton Post, 442 F.Supp. 1060 (D. D.C. 1977) 200... 7

John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543

RIS Gi ib oe edsittcdabeaiguncstaiesbaell ine ccadelinsah clelesshadicgkiammessaes 5, 8

Zim’s Foodliner Inc. v. NLRB, 495 F.2d 1131 (7th Cir.

1974), cert. den., 419 U.S. 964 (1974) oe. 6

Statutes

ees siting, PUIG UE i 1

National Labor Relations Act, 29 U.S.C.:

I a te 5,8

I NE. Sk cba eis <encdcipaebesedeenisckerCaaescsetinioen ai 4, 6, 8,9

No.

In the Supreme Court

OF THE

United States

October Term, 1980

Hospirau anv InstituTionaL Workers Union, Locat 250,

Petitioner,

Vs.

PasaTIEMPO DEVELOPMENT Corp.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

to the United States Court of Appeals

for the Ninth Circuit

Hospital and Institutional Workers Union, Local 250,

respectfully prays that a Writ of Certiorari issue to re-

view the judgment and opinion of the United States Court

of Appeals for the Ninth Circuit.

OPINION BELOW

The opinion of the Court of Appeals is reported at 627

F.2d 1011 and appears as Appendix A. The District Court

did not enter written findings but portions of its oral find-

ings are reprinted as Appendix B.

JURISDICTION

The judgment of the Court of Appeals for the Ninth

Circuit was entered on September 17, 1980. Jurisdiction

of the Court is invoked under 28 U.S.C. ¢ 1254 (1).

2

ASTATEMENT OF THE CASE

When Pasatiempo Development Corp. took over Pine

Towers Convalescent Hospital in San Francisco on Novem-

ber 1, 1976, the hospital was operating under an oral ex-

tension of an expired collective bargaining agreement

between the prior owner, Western States Convalescent

Hospitals and Hospital and Institutional Workers Union,

Local 250.

Three weeks after the change in ownership which was

accompanied by no change in employees, operations, super-

vision or working conditions; Pasatiempo’s attorney, J.

Richard Thesing, met with a Local 250 business representa-

tive to initiate discussions on a successor collective bar-

gaining agreement. Mr. Thesing assured the business agent

that Pasatiempo would “not make any changes in the

wages or benefits as we were required to do as a successor,

unless we first negotiated with them about them.” After

the initial contact, negotiations ensued which ultimately

led to a new collective bargaining agreement between

Pasatiempo and Local 250 covering Pine Towers (and

several other facilities) retroactively effective to February

1, 1977.

During that interim period of three months a worker,

Sadie Herndon, was discharged in December of 1976. A

formal written grievance was filed which resulted in two

grievance meetings with management and Local 250. When

1The business agent’s testimony was that Mr. Thesing assured

him that there would be no changes in the Western States contract

pending negotiation of a new contract. For purposes of this Petition,

it is not necessary to resolve this factual conflict.

3

no resolution was reached, the union demanded arbitra-

tion.? Mr. Thesing’s response on behalf of Pasatiempo was

as follows:

Dear Mr. Dixon:

Your letter to Mrs. Pung regarding Sadie Herndon

has been forwarded to me for reply. The three arbi-

trators which you have proposed are not acceptable.

Please have the person who will be handling this

matter on behalf of Local 250 contact me with regards

to the selection of a mutually agreeable arbitrator.

Very truly yours,

J. Richard Thesing

Subsequently, after the new agreement was consum-

mated, Pasatiempo changed its position and refused to

arbitrate the discharge. Local 250 filed a Petition to Compel

Arbitration in a California State Court which was removed

to the District Court by Pasatiempo.

The District Court concluded that since no specific under-

standing had been reached between Mr. Thesing and the

Local 250 business representative that Pasatiempo would

be bound by the arbitration provision of the prior Western

States agreement while negotiations continued for a new

contract, the successor would not be compelled to arbitrate

the discharge case. The District Court recognized how-

ever, “that there was an agreement to continue certain of

the provisions of the prior contract.”

*Both the Western States and Pasatiempo contracts provided for

final and binding arbitration. The Pasatiempo agreement modified

the prelimina: steps of the grievance procedure. Both contracts

limited discharges to “just cause” situations.

4

The Ninth Circuit’s affirmance is founded upon the Dis-

trict Court’s factual finding that no specific understanding

was reached that Pasatiempo would abide by the arbitra-

tion provision of the contract until a new agreement was

consummated. App. p. A-3.

As we shall demonstrate, this case presents an important

issue left undecided by the Court’s holding in NLRB v.

Burns Int'l Security Service, Inc., 406 U.S. 272 (1972) and

which has led to confusion and conflict between the Courts

of Appeals and the National Labor Relations Board. Pre-

cisely stated, may the union enforce under 29 U.S.C. § 185

an obligation to arbitrate during the interim period when

no contract exists but during which the employer is obli-

gated not to alter terms and conditions of employment?

REASONS WHY THE WRIT SHOULD BE GRANTED

1. NLRB v. Burns Int'l Security Services, Inc., supra,

holds that a successor employer is not prohibited from

changing the terms and conditions of employment when it

takes over a business. As this Court however emphasized,

once the successorship status is recognized, the new owner

may not alter terms and conditions of employment without

first bargaining with the union representing the employees.

406 U.S. at 293. See also, NLRB v. Bachrodt Chevrolet Co.,

468 F.2d 963 (7th Cir. 1972), remanded, 205 N.L.R.B. 784,

enforced, 515 F.2d 512, cert. den. 423 U.S. 927 (1975).

Here Pasatiempo promised not to make any changes,

and as far as the record reveals made little if any changes

5

before the new agreement was reached.* Having failed to

initially reject the arbitration clause (and any other sub-

stantive provision), Burns teaches that any subsequent

change would be unlawful absent bargaining.

This rule is coupled with that of John Wiley & Sons, Inc.

v. Livingston, 376 U.S. 543 (1964) where a successor em-

ployer was compelled to arbitrate a dispute arising under

the provisions of a contract between the union and an em-

ployer which merged into the successor company. Had

Sadie Herndon been discharged just prior to November 1,

1976, Pasatiempo would have been obligated to arbitrate

the merits of the discharge and be bound by the remedy.

See also, Golden State Bottling Co. v. NLRB, 414 U.S. 168

(1973). Wiley & Sons instructs that at least the substantive

duty to arbitrate survives in a successor situation even if

as Burns holds the successor employer is not prohibited

from making initial changes or subsequent changes after

good faith bargaining.‘

2. As this Court recognized, Section 158 (a)(5) of the

National Labor Relations Act prohibits a successor em-

ployer from making unilateral changes without appropriate

‘The administrator testified that “step” increases were not given

although there was no evidence any employee was due them or that

the union was aware of any such failure. Although counsel for

Pasatiempo stipulated that dues were paid to the union under a

checkoff provision, the District Court expressed some doubt on the

union’s independent proof of this. Otherwise there was compliance

with the Western States Contract in effect when Pasatiempo took

over.

‘When no successorship occurs, no obligation to bargain arises.

Howard Johnson Co. v. Detroit Local Joint Executive Board, 417

U.S. 249 (1974).

6

bargaining with the employee union NLRB v. Burns Int'l

Security Services, supra.’ Where such a unilateral change

occurs the remedy imposed by the National Labor Rela-

tions Board is an order reinstating the status quo sub-

stantially the same order as if the previous contract were

enforced under 29 U.S.C. § 185.

The confusion which this Petition seeks to have this

Court clarify arises partially from the Board’s own indeci-

sion with respect to the survivability of the arbitration

requirement. Initially the Board took the position that it

would enforce the obligation to accept grievances, but not

to submit them to binding arbitration. The Hilton Davis

Chemical Company, 185 N.L.R.B. 241 (1970). That doctrine

has now been recently overruled. American Sink Top &

Cabinet Co. Inc., 242 N.L.R.B. No. 53 (1979).

3. When faced with this issue within the context of a

suit brought under 29 U.S.C. § 185, the federal courts

have reached conflicting results whether it is the arbitra-

tion requirement or the substantive provision which the

union seeks to enforce. These cases arise when there is an

interim period between contracts either with the same or

a successor employers but when both are under the same

obligation not to unilaterally change conditions. Some

courts have refused to enforce such contractual obligations,

Oil, Chemical & Atomic Workers Int'l Union v. American

Maize Products Co., 492 F.2d 409 (7th Cir. 1974), cert.

den., 417 U.S. 969 (1974); Proctor & Gamble Independent

5See also Zim’s Footliner Inc. v. NLRB, 495 F.2d 1131 (7th Cir.

1974), cert. den., 419 U.S. 964 (1974) and NLRB v. Edjo Inc.

F.2d .. , 105 LRRM 3001 (9th Cir. 1980).

7

Umon v. Proctor € Gamble Manufacturing Company, 312

F.2d 181 (3rd Cir. 1962), cert. den., 374 U.S. 830 (1963) ;

General Warehousemen, Local 636 v. J. C. Penney Co.,

484 F.Supp. 130 (W. D. Pa. 1980) ; Milwaukee Typographi-

cal Union v. Madison Newspaper, 444 F.Supp. 1223 (W. D.

Wise. 1978); 1.B.E.W. v. Wadsworth Electric Manufac-

turing Co., 240 F.Supp. 292 (E.D. Kan. 1965).

Others have indicated a willingness to enforce such

obligations where a successorship occurs or have enforced

such obligations. General Teamsters Local No. 249 v. Bill’s

Trucking Inc., 493 F.2d 956 (8rd Cir. 1974); United Steel-

workers v. United States Gypsum Co., 492 F.2d 713 (5th

Cir. 1974) United Steelworkers v. Reliance Universal, Inc.,

335 F.2d 891 (3rd Cir. 1964); Wackenhut Corp. v. Plant

Guard Workers Union, 332 F.2d 954 (9th Cir. 1964);

Washington-Baltimore Newspaper Guild v. Washington

Post, 442 F.Supp. 1060 (D. D.C. 1977); Newspaper Guild

v. Central States Publishing Co., 451 F.Supp. 1112 (E.D.

Pa. 1978) and Local 1115 Joint Board v. B & F Invest-

ments, 436 F.Supp. 1203 (S.D. Fla. 1977).

The Court’s reliance upon the District Court’s finding

that there was no specific agreement to arbitrate formed

in the meeting between the union representative and Mr.

Thesing is not dispositive since it is the legal obligation

imposed on the suecessor not to change conditions which

is the basis of the obligation to arbitrate. Similarly, since

Local 250 and Western States were operating on an oral

extension of their contract, its expired status did not affect

8

the obligations of the successor who took over the facility

with knowledge of the contract.°

4. This confusion arises out of the effort made in

NLRB v. Burns Int'l Security Service, supra, to distinguish

John Wiley & Sons, Inc. v. Livingston, supra. By noting

that the former case did not arise in the context of a suit

premised upon 29 U.S.C. $185, 7d. at 285, this Court

created a tension between two provisions of the National

Labor Relations Act, Sections 158(a)(5) and 185, which

must be harmonized. See, Howard Johnson Co. v. Hotel

Employees, supra, 417 U.S. at 255-56 and 262 n. 9.

Subsequent courts have noted the seemingly divergent

results. United Steelworkers of America v. United States

Gypsum Co., supra, 492 F.2d at 725-27 and Boeing Co. v.

Int’l Association of Machinists, 504 F.2d 307, 322 (5th

Cir. 1974).

5. Unions and employers are now left with uncertainty

as to their obligations during such an interim period. May

an employer take action which violates the contract with-

out fear of submitting the dispute to arbitration? Con-

versely, may a union take economic action even if an

arbitration procedure exists to force settlement of a dis-

pute notwithstanding a no-strike obligation?’ May the

®When Mr. Thesing met with the business representative he had

a copy of the Western States agreement which contained a “suc-

cessors” clause requiring a successor to “agree” to all terms of the

Western States contract. See, Section 24, as amended by letter of

July 25, 1974. Certainly Local 250 could have enforced the collective

bargaining agreement against Western States based on the oral

extension.

7See, Teamsters Local 174 v. Lucas Flour Co., 369 U.S. %

(1962).

9

union institute a civil action to remedy a breach of contract

under 29 U.S.C. § 185 without exhausting a grievance and

arbitration procedure if the parties have not expressly

agreed to continue it in effect until a new agreement is

reached ?

Ripe for decision is the unanswered question posed in

the petition: May the obligation to arbitrate be enforced

against an admitted successor through arbitration where

the dispute arises before the union and employer consum-

mate a new agreement? If nothing else the federal labor

policy of encouraging resolution of disputes through arbi-

tration compels a clear delineation of the obligations of

the respective parties. Cf. Nolde Brothers, Inc. v. Local

358 Bakery & Confectionery Workers Union, 430 U.S. 243

(1977).

CONCLUSION

This Court should harmonize the disparate treatment of

the obligations of successors under federal labor law which

have developed. This case poses a narrow but significant

issue which becomes more important as businesses are

transformed in periods of economic change.

For the reasons suggested above, the Petition for a Writ

of Certiorari should be granted.

Dated, December 13, 1980

Respectfully submitted,

Davin A. Rosenre.p

Van Boura, ALuEN, Werner &

Rocer

Attorneys for Petitioner

(Appendix Follows)

A-1

Appendix A

United States Court of Appeals

For the Ninth Circuit

No. 78-3252

DC # C-78-728

Hospital and Institutional Workers Local

250,

Plaintiff-A ppellant,

VS. f

Pasatiempo Development Corp.,

Defendant-Appellee.

:

[Filed September 17, 1980]

OPINION

Appeal from the United States District Court

for the Northern District of California

Honorable Robert H. Schnacke, District Judge, Presiding

Argued and submitted September 10, 1980

Before: BROWNING, Chief Judge, KENNEDY, Circuit

Judge, and HOFFMAN,’ District Judge

PER CURIAM:

Hospital and Institutional Workers Local 250 (the

Union) appeals the denial of its petition to compel arbitra-

*Honorable Walter E. Hoffman, Senior Judge, United States Dis-

trict Court for the Eastern District of Virginia, sitting by designa-

tion.

A-2

tion pursuant to § 301 of the Labor Management Reporting

Act. The Union sought arbitration to resolve a dispute

over Pasatiempo’s discharge of one of its employees from

a convalescent hospital. When the discharge occurred,

Pasatiempo had just purchased the facility from an owner

whose collective bargaining agreement with the Union had

expired. Although Pasatie-:po and the Union negotiated

a new contract, its effective date was after the discharge.

As the Union concedes, NLRB v. Burns International

Security Service, 406 U.S. 272 (1972), and Howard John-

son Co. v. Detroit Local Joint Executive Board, 417 U.S.

249 (1974), establish that a successor employer is not

bound by the substantive terms of a collective bargaining

agreement unless it expressly or impliedly assumes them.

Because the contract had expired when Pasatiempo dis-

charged the employee, we have no occasion to consider the

applicability of cases in this circuit that may have sug-

gested that a contractual duty to arbitrate under an exist-

ing contract might survive a change in ownership. See

Bartenders & Culinary Workers Local 340 v. Howard

Johnson Co., 535 F.2d 1160, 1164 (9th Cir. 1976) (Sneed,

J., concurring); Wackenhut Corp. v. International Union

United Plant Guard Workers, 332 F.2d 954, 958 (9th Cir.

1964). Nor are we persuaded that the statutory duty to

bargain in good faith obligates an employer in Pasa-

tiempo’s situation to arbitrate. See NLRB v. Bachrodt

Chevrolet Co., 468 F.2d 963, 969 (7th Cir. 1972), remanded,

205 N.L.R.B. 784, enforced, 515 F.2d 512 (7th Cir.), cert.

denied, 423 U.S. 927 1975).

pw C0 PR cn ERS NBII ee _

A-3

The Union contends that certain conduct by Pasatiempo

should be regarded as an agreement to arbitrate. Pasa-

tiempo’s maintenance of terms and conditions of employ-

ment, including the settling of employee grievances short

of arbitration, was consistent with its statutory duty as a

successor employer to bargain with the incumbent union.

This conduct, and any oral commitments to this effect, are

not sufficient to imply an agreement to be bound by the

predecessor’s expired contract, including the arbitration

terms. See General Warehousemen & Employees Local 636

v. J.C. Penney Co., 484 F. Supp. 130, 185 (W.D. Pa. 1980).

A Pasatiempo representative may have initially indi-

cated the company’s willingness to arbitrate the discharge

dispute even though it was not obligated to arbitrate. That

action, however, does not constitute, as a matter of law,

an objective manifestation of an agreement to arbitrate.

The case turns upon factual issues and the trial court’s

finding that there was no agreement is not clearly

erroneous.

AFFIRMED.

A-4

Appendix B

[Transcript Aug. 25, 1978]

THE COURT: The burden is clearly on the party seek-

ing arbitration to establish there had been an agreement

by the party to arbitrate. It’s a relatively heavy burden,

I would think.

There has been shown that there was an agreement to

continue certain of the provisions of the prior contract,

but it was clear that the method customarily used to

earrying forward all of those provisions with a written

extension of the existing contract, was not accomplished

by the parties. Something short of that was done.

What was done short of that, I am not sure of in its

totality. But certainly there was no discussion at that

time of continuing the entire contract and there was no

precise discussion about continuing the arbitration provi-

sions of the prior contract.

Absent either a total extension or some agreement indi-

eated at the time that the arbitration provisions were to

be imposed upon successor to this business, I would feel

that no showing had adequately been made that they were

bound by any such provision.

So the finding will be for the respondent. The petition

to compel arbitration will be denied.