Petition — Syufy Enterprises v. Northern California State Ass'n of I. A. T. S. E. Locals, Local Union No. 241

Office - Supreme Court, U.S.

80-1233 FILED

JAN 21 1981

IN THE SUPREME COURT OF THF UNITED STATES

ALEXANDER L. STEVAS,

CLERK

OCTOBER TERM 1980

SYUFY ENTERPRISES,

Petitioner,

v.

NORTHERN CALIFORNIA STATE

ASSOCIATION OF I.A.T.S.E. LOCALS,

LOCAL UNION NO. 241,

Respondent.

me ee ee ee ee Se”

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

J. MARK MONTOBBIO

25th Floor

One Embarcadero Center

San Francisco, California 94111

415-398-3344

Counsel for Petitioner

Counsel of Record

Of Counsel:

SEVERSON, WERSON, BERKE & MELCHIOR

25th Floor

One Embarcadero Center

San Francisco, California 94111

QUESTIONS PRESENTED

1. Whether the decision of the Court

below in holding that a party irrevocably

waives its right to judicial determination

of the jurisdiction of an arbitrator by

submitting the question of jurisdiction to

an arbitrator is contrary to federal labor

policy and holdings of other Courts of

Appeals.

2. Whether the Court below was in

error in holding that extrinsic evidence,

such as negotiations between the parties,

may be used to determine the substantive

provisions of a collective bargaining agree-

ment where no ambiguity exists in the lan-

guage of that agreement.

ii.

SUBJECT INDEX

QUESTIONS PRESENTED ..cccccccccccccvece

OPINION BELOW ....

JURISDICTION .....

CONSTITUTION AND STATUTORY

PROVISIONS INVOLVED ..cccccccccscccccces

STATEMENT OF THE CASE ..cccccccccccccce

REASONS FOR GRANTING THE WRIT .........

The Decision of the Court Below in

Refusing to Consider the

Arbitrator's Jurisdiction is in

Conflict with the Decisions of

Other Courts of Appeal, and

Inconsistent with Federal Policies

Which Seek the Resolution of

Disputes Through Arbitration, and

a Conservation of Judicial

RESsourceS ..eces

The Decision of the Court Below

Improperly Authorizes an

Arbitrator to Exceed his

Contractual Authority by

Examining Extrinsic Evidence

to Vary the Terms of

Unambiguous Factual Language ........

CONCLUSION .......

APPENDIX

aii.

TABLE OF AUTHORITIES CITED

Pages

American Can Co. v. United Paper-

makers and Paperworkers Union

356 F.Supp. 495 (1973) cessccccceee st

Atlas Plastering, Inc. v. Superior

Court

42 CiRe 3G CS (LOTT) cccccavesecenes 17

Boys Markets, Inc. v. Retail Clerks

Union, Local 770

398 U.S. 235, 90 &.Ct. 1583

CSFTO) cv ew saber cde eeesccescousavens 21,22

District 50, United Mine Workers v.

Pittston Company

210 F.Supp. 781

ee ee 15

Drake Bakeries, Inc. v. Local 50,

American Bakery & Confectionary

Workers

370 U.S. 254, 82 S.Ct. 1346

(2992) sssee TeCETETETE CROCE TTT Eee ll

Ficek v. Southern Pacific Company

338 F.2d 655 (9th Cir. 1964),

cert. denied, 380 U.S. 988

ns Va ae ak a ee ee ea oe eee ek ak > Se .

iv.

Ben Gutman Truck Serv. v. Teamsters

Local No. 600

484 F.Supp. 893

(Bis BO. SL9BG) cv csavccsasevdcesse

Humble Oil & Refining Co. v. Local

Union 866

271 F.Supp. 281

[Subs Bakes APOT) se eccsseseveenves

Humphrey v. Moore

375 U.S. 335, 84 §.Ct. 363

(1964) ...6. TERETE EEEERE EET ee

International Brotherhood of

Teamsters, etc. v. Washington

Employers, Inc.

oo? ¥.42G i365 (Sth Cig. 1977) ...:.

International Union of Operating

Engineers v. Flair Builders, Inc.

406 U.S. 487, 92 S.Ct. 1710

(AF 7S) ccceeaseusstetesesceseessese

Local 719 American Bakery Confec-

tionary Workers of America, AFL-CIO

v. The National Buiscuit Company

378 F.2d 918 (3rd Cir. 1967) ..<.

Local 1115, Nursing Home, etc. v.

Hialeah Conval. Home, Inc.

348 F.Supp. 405

(S.D. Fla. 1972) cccccccccccccees ;

Pages

il,i2

Mobil Oil Corporation v. Local

8-766, Oil, Chemical & Atomic

Workers International Union

600 F.2d 322 (lst Cir. 1979) .....

Timkin Co. v. Local U. No. 1123,

United Steel Workers of Am.

482 F.2d 1012 (6th Cir. 1973)

Truck Drivers & Helpers Union Local

784 v. Urly-Talbert Co.

330 F.2d 562 (8th Cir. 1964) .....

United Steel Workers of America v.

Enterprise Wheel & Car Corporation

363 U.S. 593, 80 S.Ct. 1358

(1960) wcccccccccccccccccccccccces

United Steel Workers of America v.

Warrior & Gulf Navigation Co.

363 U.S. 574, 80 S.Ct. 1347

(1960) wccccccccccccccccccccccccecs

Wheeler v. Saint Joseph's Hospital

63 C.A.3d 345 (1976) ......2-220e-

John Wiley & Sons, Inc. v. Livingston

376 U.S. 543, 84 S.Ct. 909

(19G6E) accccccccccccacccccceccccce

Pages

29

vi.

MISCELLANEOUS AUTHORITIES

28 U.S.C. §l12Z54(1)2 ccc ccccccccccceees

United States Code,

Dee MERON DF ceocccccccccseoce

err. Meer £ES(H) .ccccecvce

Cox, Reflections Upon Labor Arbitration

72 Har.L.Rev. 1482

Pn TOME cicseoceececcecsecec

No.

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM 1980

SYUFY ENTERPRISES,

Petitioner,

Ti

NORTHERN CALIFORNIA STATE

ASSOCIATION OF I.A.T.S.E.

LOCALS, LOCAL UNION NO. 241,

Respondent.

me ee ee ee ee ee ee ee”

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

The petitioner, SYUFY ENTERPRISES

(Syufy), prays that a Writ of Certiorari

issue to review the opinion of the United

States Court of Appeals for the Ninth Cir-

cuit. Judgment in this matter was ten-

dered on October 23, 1980.

2.

OPINION BELOW

The opinion of the Court of Appeals

was reported at 631 F.2d 124 (9th Cir.

1980). The decision of the United States

District Court for the Northern District

of California and the decision of the

arbitrator are unreported. Copies of the

opinions of the Court of Appeals, the

District Court and the arbitrator appear

in the Appendix hereto.

JURISDICTION

The opinion of the Court of Appeals

was filed on October 23, 1980. On Novem-

ber 19, 1980, judgment was entered. This

Court's jurisdiction is invoked under 28

U.S.C. §1254(1)2.

CONSTITUTION AND STATUTORY

PROVISIONS INVOLVED

United States Code, Title 9, Section 9:

If the parties in their agreement have

agreed that a judgment of the court shall

3.

be entered upon the award made pursuant to

the arbitration, and shall specify the

court, then at any time within one year

after the award is made any party to the

arbitration may apply to the court so

specified for an order confirming the

award, and thereupon the court must grant

such un order unless the award is vacated,

modified, or corrected as prescribed in

sections 10 and ll of this title. If no

court is specified in the agreement of the

parties, then such application may be made

to the United States court in and for the

district within which such award was made

In either of the following cases the

United States court in and for the dis-

trict wherein the award was made may make

an order vacating the award upon the appli-

cation of any party to the arbitration -

se & ¢

4.

(d) Where the arbitrators exceeded

their powers, or so imperfectly exe-

cuted them that a mutual, final, and

definite award upon the subject matter

submitted was not made.

x kek

United States Code, Title 29, Section 185(a):

Suits for violation of contracts

between an employer and a labor organiza-

tion representing employees in an industry

affecting commerce as defined in this

chapter, or between any such labor organi-

zations, may be brought in any district

court. of the United States having juris-

diction of the parties, without respect to

the amount in controversy or without regard

to the citizenship of the parties.

STATEMENT OF THE CASE

Syufy is a party to the Northern

California Projectionists Master Agree-

ment by virtue of its membership in a

i

multi-employer bargaining group known” as

The San Francisco Theatre Employers Asso-

ciation (Association). On December 15,

1976, Syufy, through its membership in the

Association, entered into a collective bar-

gaining agreement with the Northern Cali-

fornia State Association of I.A.T.S.E.

Locals, for and on behalf of its affiliated

local union, which included Local Union

No. 241 I.A.T.S.E. (the Unions). That

agreement was effective from August 15,

1976 to November 15, 1980.

By its term, the agreement applied to

"[the Association] all theatres contracted

herein and for all future theatres that

may be acquired by the employer to deter-

mine this agreement." The agreement con-

tained a list of 35 theatres owned by

Syufy, but did not include two existing

theatres located in Vallejo, California.

Those two theatres were owned by Syufy,

but operated by David Norwitt, d/b/a Vallejo

Enterprises, pursuant to a lease agreement

executed between Syufy and Norwitt on

April 15, 1976.

On June 15, 1976, prior to the expir-

ation of the predecessor agreement, lessee-

operator Norwitt informed the Unions that

it was disclaiming the authority of the

Association to bargain on behalf of the

two Vallejo theatres and in subsequent

correspondence requested that the Unions

meet with Norwitt to conduct separate nego-

tiations for a new collective bargaining

agreement. The parties commenced collec-

tive bargaining on October l, 1976, and

subsequently reached an impasse. On Feb-

ruary 28, 1977, Norwitt informed the Unions

that it was implementing its last and final

offer. Those changes became effective

March 24, 1977.

The response of the Unions was to file

a grievance with Syufy under the terms of

their 1976-1980 collective bargaining

agreement. In the ensuing arbitration,

Syufy challenged the jurisdiction of the

arbitrator on the grounds that the employer

of the two theatres was Norwitt, rather

than Syufy, and that the two Vallejo

theatres were not covered, nor intended

by the parties to be covered, by the col-

lective bargaining agreement. Syufy fur-

ther argued that the grievance be denied

on the merits because the unambiguous

language of the agreement indicated that

terms would apply only to Syufy theatres

specifically listed in the agreement.

The arbitrator ruled that he had no

jurisdiction over Norwitt, but that he had

jurisdiction over Syufy pursuant to the

so-called "intent of the parties during

negotiations." On the merits, the arbi-

trator ruled that despite the express and

8.

unambiguous language listing the names of

the theatres covered by the agreement, the

control exercised by Syufy over the two

Vallejo theatres brought those theatres

under the terms of the collective bargain-

ing agreement. The arbitrator ruled that

Syufy apply the terms and conditions of the

agreement to the two theatres.

Syufy filed a petition in California

Superior Court to vacate the arbitration

award on the grounds that the agreement

was limited to theatres listed in its terms,

that the arbitrator was prohibited from

amending or modifying the agreement by add-

ing additional theatres, and that the

arbitrator exceeded his jurisdiction by

requiring Syufy to apply the contract to

Norwitt's employees.

The Unions removed the matter to the

United States District Court for the Nor-

thern District of California. Cross

9.

motions for summary judgment were filed,

and the Unions' motion was granted. The

District Court refused to consider the

question of the jurisdiction of the arbi-

trator on the grounds that the parties had

agreed to have the arbitrator determine his

own jurisdiction. On the merits, the

court ruled that it was not improper for

the arbitrator to go beyond the terms of

the agreement and consider extrinsic evi-

dence in arriving at his decision.

Thereafter, appeal was taken to the

Ninth Circuit. The Ninth Circuit affirmed,

holding in essence that Syufy had waived

its right to judicial review of the arbi-

trator's jurisdiction (arbitrability) by

allowing the arbitrator to rule on his own

jurisdiction and by proceeding on the

merits. The Court also held that it was

proper for the arbitrator to consider

evidence outside the agreement in order to

decide what the parties had intended.

T_T

10.

REASONS FOR GRANTING THE WRIT

The Decision of the Court Below

in Refusing to Consider the

Arbitrator's Jurisdiction is in

Conflict with the Decisions of

Other Courts of Appeals, and

Inconsistent with Federal Policies

Which Seek the Resolution of Disputes

Through Arbitration, and a

Conservation of Judicial Resources

It is, of course, well settled that

the issue of the arbitrability of a con-

troversy, whether the arbitrator has juris-

diction over a particular dispute, is ordi-

narily a question for the court to decide.

While the courts can only exercise a limited

review over the merits of an arbitration

award, the courts are primarily charged

with determining the threshhold question

of whether the parties intended the dis-

pute to be, in fact, arbitrable. Inter-

national Union of Operating Engineers v.

Flair Builders, Inc., 406 U.S. 487, 491,

92 S.Ct. 1710, 32 L.Ed.2d 248 (1972);

John Wiley & Sons, Inc. v. Livingston,

Se

376 U.S. 543, 546-547, 84 S.Ct. 909, 11

L.Ed.2d 898 (1964); Humphrey v. Moore, 375

U.S. 335, 345, n. 8, 84 S.Ct. 363, 11 L.Ed.2d

370 (1964); Drake Bakeries, Inc. v. Local 50,

American Bakery & Confectionary Workers, 370

U.S. 254, 256, 82 S.Ct. 1346, 8 L.Ed.2d 474

(1952); United Steel Workers of America v.

Warrior & Gulf Navigation Co., 363 U.S. 574,

582, 80 S.Ct. 1347, 4 L.Ed.2d 409 (1960).

Despite this well-established rule,

the court below held that Syufy cannot

obtain judicial determination of arbitra-

bility once it proceeded to arbitration and

allowed the arbitrator to rule on his own

jurisdiction. This position was based on

the Ninth Circuit's prior rulings in Ficek

v. Southern Pacific Company, 338 F.2d 655

(9th Cir. 1964), cert. denied, 380 U.S. 988

(1965), and International Brotherhood of

Teamsters, etc. v. Washington Employers,

Inc., 557 F.24 1345 (9th Cir. 1977). In

12.

Ficek, supra, the Court affirmed the sum-

mary judgment against an employee seeking

damages in a breach of contract action,

upon the grounds the employee through his

union had previously submitted his claim

to an arbitrator. The Ninth Circuit re-

jected Ficek's claim and that the arbi-

trator was without jurisdiction and

broadly declared:

A claimant may not voluntarily submit

his claim to arbitration, await the

outcome, and if the decision is un-

favorable, then challenge the author-

ity of the arbitrator. (338 F.2d at

657)

In Washington Employers, supra, the

Ninth Circuit noted that although arbitra-

bility was ordinarily a question for the

court, that issue could be submitted to

binding arbitration by the parties, and

citing Ficek, held that the employer could

not challenge an arbitrator's jurisdiction

before the Court if the employer had ear-

lier agreed to allow the arbitrator to

hear the dispute.

13.

These decisions by the Ninth Circuit

are in conflict with the well-reasoned doc-

trine by the majority of courts in various

circuits which hold that as arbitrability

is a contractual matter subject to judicial

determination, such judicial review is not

waived merely by presenting the issue of

arbitrability to the arbitrator or by pro-

ceeding on the merits. Representative of

this majority opinion is the decision of

the Third Circuit Court of Appeals in

Local 719 American Bakery Confectionary

Workers of America, AFL-CIO v. The

National Biscuit Company, 378 F.2d 918

(3rd Cir. 1967). In Bakery Workers, the

Third Circuit specifically rejected the

argument that the employer forfeited its

right to contest jurisdiction of the arbi-

trator in the judicial forum by agreeing

to submit that issue to the arbitrator,

and by participating on the merits once

14.

the arbitrator ruled in favor of his own

jurisdiction. The Third Circuit declared:

Thus the Company's argument that the

Union is now precluded from challeng-

ing arbitrability depends on our adop-

tion of a rule that would require a

party disputing the issue to get an

injunction against arbitration before

the proceedings commence, or to re-

frain from participating in that issue,

or to seek court action immediately

upon an arbitrator's affirmation of

his own jurisdiction, at the penalty

of waiver. No such procedure is

required by statutory or decisional

law, and in a few instances where a

party has though to impute a waiver

of judicial jurisdiction in this man-

ner, the argument has been found merit-

less. In our own federal litigation

system, we require no special juris-

dictional appearances and permit no

interlocutory appeals from a court's

decision in favor of its jurisdiction.

Since federal labor policy with re-

spect to arbitration favors the estab-

lishment of a private juriditial system,

there is even less reason to make re-

sort to interstital activity manda-

tory, when the possibility exists that

a labor dispute can be settled by any

use of the courts whatsoever. Thus,

where as here the reluctant party has

presented its objection to arbitra-

bility to the arbitrator and has not

thereafter clearly indicated its will-

ingness to forego judicial review, we

believe that the issue is sufficiently

preserved by a subsequent inquiry.

[Footnotes omitted.] 378 F.2d at

921-922.

15.

This reasoning is followed by courts

within the Second Circuit, American Can Co.

v. United Papermakers and Paperworkers

Union, 356 F.Supp. 495, 497, n. 1. (E.D.

Pa. 1973); Humble Oil & Refining Co. v.

Local Union 866, 271 F.Supp. 281 (S.D.

N.Y. 1967); within the Fourth Circuit,

District 50, United Mine Workers v.

Pittston Company, 210 F.Supp. 781, 786

cuit, Local 1115, Nursing Home, etc. v.

Hialeah Conval. Home, Inc., 348 F.Supp.

405, 408-410 (S.D. Fla. 1972); and most

recently in the Eighth Circuit, Ben Gutman

Truck Serv. v. Teamsters Local No. 600,

484 F.Supp. 893, 896 (E.D. Mo. 1980).

The First Circuit has held that a court

must first independently consider the issue

of arbitrability in an action to enforce an

arbitrator's award. Thus, the First Cir-

cuit has implicitly followed the holdings in

16.

the Second, Third, Fourth, Fifth and Eighth

Circuits. In Mobil Oil Corporation v. Local

8-766, Oil, Chemical & Atomic Workers Inter-

national Union, 600 F.2d 322, 325 (lst Cir.

1979), the Court declared:

We agree with Mobil that the District

Court limited itself to a review of

the arbitrator's decision. The only

logical interpretation that can be

given to the italicized sentence is

that the District Court misunderstood

its duty to decide independently the

question of arbitrability and errone-

ously deferred to the arbitrator's

determination that the subcontracting

dispute was arbitrable ... . This,

however, referred only to the second

step of the arbitrator's review pro-

cess. The first step is a determina-

tion of the arbitrability of the dis-

pute. While the court may refer to

an arbitrator's decision on arbitra-

bility in order to aid its determina-

tion, it must make it its own inde-

pendent determination of this thresh-

hold issue. [Footnotes omitted,

citations omitted; emphasis added. ]

The California courts where this action

first arose have long held that parties must

present all issues to the arbitrator first,

deferring litigation over jurisdiction and

arbitrability to subsequent proceedings to

17.

enforce or vacate the award. A California

court of appeal has specifically noted that

"[T])he preferred procedure is to proceed by

arbitration and attack confirmation on

appeal.” Atlas Plastering, Inc. v. Superior

Court, 72 C.A.3d 63, 67 (1977); Wheeler v.

Saint Joseph's Hospital, 63 C.A.3d 345

(1976).

In the instant matter, Syufy did not

fully indicate a willingness to forego

judicial review. Nowhere did Syufy agree

that the arbitrator's ruling on his own

jurisdiction would be final. Syufy merely

permitted the arbitrator to rule on his own

jurisdiction, and produced evidence on the

merits of the grievance. Under the major-

ity rule, as indicated above, this is

insufficient to create a waiver to judicial

review.

As the Ninth Circuit's decision below

conflicts with majority rule by other

18.

courts, including the First and Third Cir

cuits and district courts within the Second,

Fourth, Fifth and Eighth Circuits and the

California courts of appeal, this petition

for certiorari should be granted. Avail-

ability of judicial review of the arbitra-

bility of a dispute is a recurring issue

in labor relations, and one whose answer

should not depend upon the circuit in

which it arises.

In addition to the fact that the Ninth

Circuit's ruling is in conflict with that

of most other federal courts, the rule is

also contrary to the established Congres-

Sional policy favoring the resolution of

industrial disputes through voluntary

arbitration. See generally, United Steel

Workers v. Warrior & Gulf Navigation,

Supra. The Ninth Circuit's position

requires that whenever a party questions

the authority of an arbitrator to hear a

19.

dispute, it must seek an injunction to pre-

vent the arbitration, or force the grieving

party to obtain an affirmative injunction

compelling arbitration. The party challeng-

ing the arbitrability of a dispute cannot

voluntarily present that issue to the arbi-

trator in the hopes of obtaining a favorable

ruling and thus an end to the controversy.

Nor can such a party, if it loses before

an arbitrator on an issue of arbitrability,

proceed on the merits and possibly end the

dispute in that manner with a favorable

ruling. Rather, under the Ninth Circuit's

approach, where a party feels the arbitra-

tor lacks jurisdiction, it must avoid an

arbitration proceeding at all costs, thereby

avoiding a speedy resolution of the contro-

versy through arbitration. In California,

the party asserting the issue of arbitra-

bility cannot obtain review before the

Ninth Circuit but if the matter is left in

20.

State court, appellate review will follow.

By forcing the parties into court before

arbitration in all instances where an arbi-

trator's authority is at question, judicial

resources are not conserved. Moreover,

Congressional policy encouraging arbitration

is thwarted.

The Ninth Circuit's approach is also

directly inconsistent with the role the

courts are intended to play with respect to

arbitration. Under the Ninth Circuit rule,

where an arbitrator is given authority by

the parties to rule on his own jurisdiction,

the arbitrator's ruling on jurisdiction

becomes unreviewable. Although the courts

are expected to defer to the arbitrator's

special expertise in deciding the merits of

the grievance, the courts are charged with

the duty of reviewing a disputed award in

order to ensure that there has not been an

improper extension of the arbitrator's powers.

The courts in simple terms are expected to

ake

Oversee the process to protect against abuse

and to ensure, in contract terms, that the

parties have not been forced to receive more

than they bargained for. By holding that

an arbitrator's decision under his own jur-

isdiction is unreviewable, the Ninth Cir-

cuit's ruling abrogates the protection the

courts are intended to give to the parties

and in effect gives the arbitrator unlimited

power "to impose obligations outside the

contract limited only by his understanding

and conscience." Cox, Reflections Upon

Labor Arbitration, 72 Har.L.Rev. 1482,

1508-1509 (1959).

Finally, the Ninth Circuit's ruling

has an effect of prolonging industrial

strikes. In cases involving a Boys

Market injunction to halt a strike in

breach of contract, the guid pro quo is

the willingness of both sides to submit

the dispute to arbitration. Boys Markets,

22.

Inc. v. Retail Clerks Union, Local 770, 398

U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199

(1970). Here, the Ninth Circuit is foment-

ing labor strife by forcing a party to

forego the protection from strikes accorded

under a collective bargaining agreement or

to irrevocably waive its right to contest

the threshhold question of arbitrability.

The Ninth Circuit's approach requires a

party challenging the arbitrator's juris-

diction to go into court before an arbitra-

tion proceeding is commenced. By requiring

intervention of the court at an early stage

of an industrial dispute, that dispute is

both intensified and prolonged. The purpose

of arbitration, in short, is to prevent that

exact result.

23.

The Decision of the Court

Below Improperly Authorizes an

Arbitrator to Exceed his

Contractual Authority by Examining

Extrinsic Evidence to Vary the Terms

of Unambiguous Factual Language

In the instant matter, the party's

collective bargaining agreement contained

language stating the contract would be

"binding on the employer for all theatres

contracted herein and for any future

theatres that may be acquired by the

employer during the term of this Agree-

ment." An Appendix to the Agreement

entitled "Appendix of Existing Locals,

Employers and Theatres covered by this

Agreement as of August 15, 1976" listed 35

theatres owned by Syufy but did not list

the two Vallejo theatres. Despite this

clear contractual language, the arbitrator

ruled that the two Vallejo theatres were

covered by the Agreement. The arbitrator

based his ruling upon extrinsic evidence

24.

outside the language of the contract, such

as bargaining history.

In presenting the issue to the Dis-

trict Court and the Ninth Circuit, Syufy

argued that the arbitrator's utilization

of extrinsic evidence to "interpret the

meaning" and expand upon unambiguous lan-

guage, was a decision outside the essence

of the collective bargaining agreement.

Both courts below rejected this argument

broadly holding in essence that whenever

parties have a dispute over the terms of a

collective bargaining agreement, extrinsic

evidence may be considered by the arbitra-

tor to determine the intention of the

parties regardless of the language in the

contract.

These holdings misconstrue the nature

of an arbitrator's authority. It is, of

course, true that it is an arbitrator's

instruction that is bargained for and,

25.

therefore, the courts have no basis over-

ruling on the merits because their inter-

pretation of the contract is different than

his. United Steel Workers of America v.

Enterprise Wheel & Car Corporation, 363

U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424

(1960). Nonetheless, arbitrators do not

have complete discretion in ordering the

relationship of the parties under the

agreement. Rather, the arbitrator's dis-

cretion is limited by the terms of the

agreement. As this Court stated in

Enterprise Wheel & Car Corporation, supra,

363 U.S. at 597:

-e».- an arbitrator is confined to

interpretation and application of

the collective bargaining agreement.

He does not sit to dispense his own

brand of industrial justice. He may,

of course, look for guidance from any

sources, yet his award is legitimate

only so long as it draws its essence

from the collective bargaining agree-

ment. When the arbitrator's words

manifest an infidelity to this obli-

gation, courts have no choice but to

choose enforcement of the award.

26.

The above well-settled doctrine indi-

cates that the arbitrator's ultimate respon-

sibility in regulating the relationship

between the parties is to apply and effec-

tuate the terms of the agreement, as such

is the final embodiment of the parties'

intent. Consequently, this Court has indi-

cated that as arbitration is a matter of

contract, "the answer to the question must

lie within the four corners of the agree-

ment between the parties." Truck Drivers

& Helpers Union Local 784 v. Urly-Talbert

Co., 330 F.2d 562, 563 (8th Cir. 1964),

Citing John Wiley & Sons, Inc. v.

Livingston, 376 U.S. 543, 84 S.Ct. 909,

ll L.Ed.2d 898 (1964).

Contrary to the opinion of the courts

in the matter below, an arbitrator is not

entitled to look to extrinsic evidence to

"interpret" the provisions of a collective

bargaining agreement whenever a dispute

arises simply because such extrinsic

27.

evidence may exist. The parties bargained

for authority to resolve the suit based

upon the terms of the collective bargain-

ing agreement. The terms of such an agree-

ment are often facially clear in their

exact meaning. In such instances, the only

procedure is for the arbitrator to simply

apply that clear meaning. There is abso-

lutely no reason for the arbitrator to take

another step and look at extrinsic evidence

as may exist.

Use of extrinsic evidence is thus only

necessary where the simple words of the

agreement do not in and of themselves

resolve the parties' dispute. An arbitra-

tor can go outside the terms of an agree-

ment in only two instances. First, where

the contract is silent on a disputed issue.

In such a case an arbitrator can properly

examine extrinsic evidence such as the past

relationship between the parties and common

industrial practice for guidance. Secondly,

aes

extrinsic evidence may be helpful to inter-

pret ambiguous language in a collective

bargaining agreement. The language of a

collective bargaining agreement is ambigu-

ous when such language is on its face

inexact. Contrary to the Ninth Circuit,

here the terms of the collective bargain-

ing agreement are not ambiguous simply

because the parties disagree over their

interpretation. Disputes can arise over

the meaning of exact language. Yet, even

where contractual language is inexact,

extrinsic evidence is merely a source of

interpretation of the terms of that lan-

guage. The extrinsic evidence cannot

somehow supercede clear, concise contrac-

tual terms or be used by an arbitrator to

interpret the contractual language in a

contradictory or unnatural way. It is in

such cases that the arbitrator's ruling is

not within the "essence" of the agreement

29.

and such rulings must be overturned.

Accordingly, a distinction must be made

between ambiguous and unambiguous contrac-

tual language when extrinsic evidence is

used by an arbitrator. Indeed, where con-

tractual language is unambiguous, any

attempt to bury its clear meaning through

use of extrinsic evidence is by its very

nature outside the "essence" of the agree-

ment.

The Ninth Circuit's ruling below

abolishes this critical distinction, des-

pite the fact that other courts recognize

its validity. For example, in Timkin Co.

v. Local U. No. 1123, United Steel Workers

of Am., 482 F.2d 1012, 1014-1015 (6th Cir.

1973), the Sixth Circuit declared:

We conclude that the Arbitrator

exceeded his authority in finding as

he did. The "voluntary quit" provi-

sion in the agreement specifically

applies to circumstances of "an

unauthorized absence for seven (7)

consecutive work days." Consequently,

there was no need to go outside the

record to consider other definitions

30.

of the term "quit". A collective bar-

gaining agreement is after all a con-

tract and the arbitrator is limited to

the interpretation and application of

that contract. John Wiley & Sons,

Inc. v. Livingston, 376 U.S. 543, 84

S.Ct. 909, 11 L.Ed.2d 898 (1964).

In the instant matter, the contractual

language defining the scope of the agree-

ment is clearly unambiguous, and no court

below specifically found to the contrary.

Accordingly, by ignoring the distinction

between ambiguous and unambiguous contrac-

tual language, the Ninth Circuit's ruling

below misconstrues and thus raises serious

qustions about the proper scope of an

arbitrator's authority to consider extrin-

sic evidence.

3l.

CONCLUSION

For these reasons, a writ of certiorari

should issue to review the judgment and

opinion of the Ninth Circuit. Alternatively,

the matter should be remanded for further

consideration.

DATED: January 20, 1981.

Respectfully submitted,

J. MARK MONTOBBIO

25th Floor

One Embarcadero Center

San Francisco, California

Counsel for Petitioner

Of Counsel:

SEVERSON, WERSON, BERKE & MELCHIOR

25th Floor

One Embarcadero Center

San Francisco, California 94111

94111

APPENDIX

No.

IN THE SUPREME COURT OF THE

UNITED STATES

October Term 1980

SYUFY ENTERPRISES,

Petitioner,

vs.

NORTHERN CALIFORNIA STATE

ASSOCIATION OF I.A.T.S.E.

LOCALS, LOCAL UNION NO. 241,

Respondent.

APPENDIX TO A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

J. Mark Montobbio

25th Floor

One Embarcadero Center

San Francisco, CA 94111

Counsel for Petitioner

Of Counsel:

SEVERSON, WERSON, BERKE & MELCHIOR

25th Floor

One Embarcadero Center

San Francisco, California 94111]

Filed O. sober 23, 1980

Richard H. Deane, Clerk, U.S.

Court of Appeals

Received November 10, 1980

Severson, Werson, Berke & Melchior

In the United States Court of Appeals

For the Ninth Circuit

SYUFY ENTERPRISES,

Petitioner-Appellant,

Vv. No. 78-3010

NORTHERN CALIFORNIA STATE

ASSOCIATION OF IATSE LOCALS

AND LOCA™T UNION #241,

OPINION

Respondents~-Appellees.

meee ee

Appeal from the United States

District Court for the Northern

District of California

Honorable Samuel Conti,

District Judge

Argued and Submitted,

August 14, 1980

Before: CHOY and FARRIS, Circuit Judges,

and EAST,* District Judge

*Honorable William G. East, Senior United

States District Judge for the District of

Oregon, sitting by designation.

Appendix -2-

PER CURIAM:

Syufy appeals the District Court's

confirmation of the Labor-Management

Agreement award. We note jurisdiction and

affirm.

In 1976, the collective bargaining

agreement betwcen the parties expired.

During negotiations for a new agreement, an

issue arose whether the Cine 21 theater and

the Vallejo Auto Movies, two theaters that

had been leased by Syufy to David Norwitt

in April 1976, were to be covered by the

new agreement. The parties were unable to

resolve the question and, therefore,

excluded the theaters from the list of

theaters covered by the agreement and

agreed to resolve the dispute through

"litigation."

After a wage dispute arose at the two

unlisted theaters, the Union claimed that

the theaters were subject to the agreement,

filed a grievance, and pursuant to the

arbitration clause of the agreement,

demanded arbitration. Syufy challenged

the jurisdiction of the arbitrator on the

ground that the theaters were not subject

Appendix

to the agreement, but agreed to have the

issue decided by the arbitrator. The

arbitrator ruled that the two theaters were

subject to the agreement and ordered Syufy

to make the employees whole for any losses.

Syufy filed a petition in California

Superior Court to vacate the award on the

ground that the theaters were not subject

to the agreement. The Union removed the

case to the District Court and filed a

cross-petition to confirm the award. On

cross-motions for summary judgment, the

District Court confirmed the award.

The appeal presents two issues:

i. Did the arbitrator have jurisdic-

tion to enter the order?

- Was the arbitrator's decision

Grawn from the essence of the contract?

Discussion:

Issue l.

Arbitration is a matter of contract.

Since the parties stipulated that the

arbitrator could decide whether the two

Appendix ae

theaters were covered by the agreement,

Syufy cannot contend that the arbitrator

lacked jurisdiction to decide the issue.

United Steelworkers v. Warrior & Gulf

Navigation Co., 363 U.S. 574, 582 (1960);

International Brotherhood of Teamsters v.

Washington Employers, Inc., 557 F.2d 1345,

1349 (9th Cir. 1977). Syufy's argument

that because the two theaters were not

listed in the agreement the arbitrator

lacked jurisdiction is rejected.

Issue 2.

An arbitration award is legitimate so

long as it draws its essence from the

collective bargaining agreement and does

not manifest an infidelity to the agree-

ment. Riverboat Casino, Inc. v. Local

Joint Executive Board, 578 F.2d 250, 251

(9th Cir. 1978).

Syufy argues that since the agreement

does not specifically cover the two subject

theaters, the arbitrator's decision lacks

fidelity to the agreement. The argument is

rejected because it was entirely proper for

the arbitrator in this case to consider the

relevant bargaining history in order to

Appendix -5-

decide what the parties intended.

A collective bargaining agreement is

different in nature, scope, and purpose

from the ordinary commercial contract. Its

purpose is to establish a system of indus-

trial self-government. "It is more than a

contract; it is a generalized code to

govern a myriad of cases which the drafts-

men cannot wholly anticipate." Warrior &

Navigation Co., 363 U.S. at 578. The words

in such an agreement must be understood in

the context of the history of the negotia-

tions which gave rise to their inclusion.

Steelworkers v. American Mfg. Co., 363 U.S.

564, 570 (1960) (Brennan, J., concurring).

Courts and arbitrators may rely upon

extrinsic evidence to interpret various

aspects of collective bargaining agreements.

In United Steelworkers of America v. Warrior

& Gulf Navigation Co., 363 U.S. at 581, 582,

for example, the court said: "The labor

arbitrator's source of law is not confined

to the express provisions of the contract,

as the industrial common law--the practices

of the industry and the shop--is equally a

part of the collective bargaining agreement

Appendix a6=

although not expressed in it." This Court

has previously held that it is proper for

courts to consider evidence of the intent

of the parties, particularly bargaining

history, in determining the scope of arbi-

tration clauses. Haig Berberian, Inc. v.

Cannery Warehousemen, 535 F.2d 496, 499

(9th Cir. 1976); Pacific Northwest Bell

Telephone Co. v. Communication Workers of

America, 310 F.2d 244 (9th Cir. 1962).

Similarly, the arbitrator may look to

the negotiating history for assistance in

1/

interpreting — the substantive provisions

1/ This case is distinguishable from Boise

Cascade Corp. v. United Steelworkers of

of America, etc., 588 F.2d 127, cert.

denied, 444 U.S. 830 (1979). That case

involved the interpretation of provi-

sions of a contract relating to employees

who were assigned to or elected to take

jobs which carried lower rates of pay

than their regular jobs. The arbitrator

found that the provisions in question

were ambiguous, and relied upon extrinsic

evidence to resolve the ambiguity in

favor of the union. The employer argued

On appeal that the consideration of

extrinsic evidence was improper because

it violated the arbitration clause of

the agreement, which prohibited the

arbitrator from adding to, detracting

from, or altering in any way any provi-

sion of the contract. The court

Appendix = -

of the bargaining agreement. See e.g.,

Peerless Pressed Metal Corp. v. Interna-

tional Union of Electrical, Radio and

Machine Workers, 451 F.2d 19, 21 (lst Cir.

1971).

The arbitrator in this case found that

with regard to the two theaters, the parties

agreed that the "application of the contract

- is in dispute, and/or subject to

litigation, the outcomezof which will

determine this issue." The dispute centered

upon the issue of whether Syufy was the

employer at those theaters. It was this

issue to which the arbitrator addressed

himself, finding that Syufy was in fact

1/ (Continued)

rejected that contention, holding that

where the contract provision in question

was arguably ambiguous, the arbitrator's

consideration of extrinsic evidence did

not violate the "no additions or altera-

tions" clause. Boise did not hold that

a finding of ambiguity in the contract

1s prerequisite to the consideration of

extrinsic evidence where the contract

contains no provisions prohibiting

"additions or alternations." The col-

lective bargaining agreement between

Syufy and the Union contained no such

provisions.

Appendix -8-

the employer. The arbitrator concluded

that Syufy was subject to the agreement;

thus impliedly finding that the parties

intended to subject the two theaters to the

agreement if Syufy was found to be the

employer.

We do not hold that an arbitrator may

rely upon negotiating history to contradict

express provisions of a collective bargain-

ing agreement. The arbitrator in this case

relied upon credible, documentary evidence

of the party's intent to extend the coverage

of the contract, not to contradict it.

Under these circumstances, we do not

find that the arbitrator's decision lacks

fidelity to the agreement. The judgment

entered by the District Court on July 17,

1978, is AFFIRMED.

Appendix -9-

Filed July 14, 1978

William L. Whittaker, Clerk

UNITED STATES DISTRICT

COURT

NORTHERN DISTRICT OF CALIFORNIA

SYUFY ENTERPRISES, a limited

partnership,

Petitioner,

NORTHERN CALIFORNIA STATE

ASSOCIATION OF I.A.T.S.E.

LOCALS and LOCAL UNION NO.

241, unincorporated associa-

tions,

Respondents.

NORTHERN CALIFORNIA STATE

ASSOCIATION OF I.A.T.S.E.

LOCALS and LOCAL UNION NO.

241, unincorporated associa-

tions,

Cross-petitioners,

SYUFY ENTERPRISES, a limited

partnership,

Cross~-Respondent.

No.

C-/7/-2907/78C

DECISION

Appendix -10-

This action is brought to review an

arbitrator’s award arising from a labor

dispute between petitioner, Syufy Enter-

prises (Syufy), and respondent, the

Northern California State Association of

I.A.T.S.E. Locals, and Local Union No. 241

(the Union). i/ Syufy seeks to vacate the

arbitrator's award, while the Unions seek

an order confirming the award. Each party

has filed a motion for summary judgment.

As will appear, this action can be properly

resolved on the summary judgment motions.

See International Association of Machinists

v. Texas Steel Co., 538 F.2d 1116, 1119

(sen Cir. 1976).

The arbitration decision concerned the

applicability of the collective bargaining

agreement between Syufy and the Unions to

certain theatres located in Vallejo,

California. The main issues before the

arbitrator were whether the arbitrator had

jurisdiction over Norwitt (the theatres'

lessee) and the two theatres and whether

the collective bargaining agreement applied

to the two theatres owned by Syufy but

leased to Norwitt.

Appendix -ll-

The arbitrator found that he had juris-

diction over the two theatres and found that

the theatres were bound by the terms of the

bargaining agreement. The issue before the

court is whether the questions decided by

the arbitrator were in fact arbitrable and

whether the decision "draws its essence from

the collective bargaining agreement." United

Steelworkers v. Enterprise Corp., 363 U.S.

593, 597 (1960); International Ass'n of

Machinists v. Texas Steel Co., supra;

General Drivers & H.U., Local No. 554 v.

Young & Hay Transp. Co., 522 F.2d 562

(8th Cir. 1975). 2/

Bs Arbitrability

On the question of arbitrability, if

the arbitrator is given the power by

agreement of the parties to decide the

questions of his own jurisdiction and the

applicability of the collective bargaining

agreement to the two theatres, then the

court is limited in its review to deciding

whether the parties agreed to the conferral

Of such power. See International Brother-

hood of Teamsters, Etc. v. Wash. Employers,

Inc., 557 F.2d 1345 (9th Cir. 1977). It is

clear from the transcript of the hearing

Appendix -l2-

before Arbitrator Barsamian that the parties

agreed that the arbitrator could decide the

question whether he had jurisidiction over

Norwitt and the two theatres as well as

whether the collective bargaining agreement

applies to these theatres. See Respondent's

Exhibit A, p.l of transcription. While

petitioner may not have had to stipulate to

such arbitrability, having once done so, he

cannot now complain that the arbitrator

lacked jurisdiction to decide these very

issues. See International Brotherhood of

Teamsters, Etc. v. Wash. Employers, Inc.,

Supra; Ficek v. Southern Pacitic Co., 338

F.2d 655 (9th Cir. 1964), cert. denied,

380 U.S. 988 (1965).

2. The “essence requirement".

After review of the record the court

concludes that the determination by the

arbitrator that he had jurisdiction over

the two theatres and that the collective

bargaining agreement applied to the two

theatres is rational, sufficiently grounded

in the bargaining agreement, and cannot be

described as "so palbably faulty that no

judge, or group of judges, could ever con-

ceivably have made such a ruling." Inter-

Appendix -13-

ternational Union of Elec., Radio & Machine

Wkrs. v. Peerless Pressed Metal Corporation,

489 F.2d 768, 769 (lst Cir. 1973), quoting

Safeway Stores v. Bakery Workers Local 11l,

390 F.2d 79, 82 (5th Cir. 1968). See

findings of Arbitrator Barsamian, Decision

p.-14: 5-18; p.15: 15-32; p.16: 24-29.

Petitioner, however, contends that it

was error for the arbitrator to go beyond

the collective bargaining agreement and

consider other evidence in arriving at his

decision. To rely on such evidence outside

the collective bargaining agreement, i.e.,

negotiations with respect to the new

contract, the side agreement with respect

to resolution of the coverage dispute, the

bargaining history of the parties, the

relationship of Syufy and Norwitt, does not

mean, aS petitioner seems to contend, that

the arbitrator has added terms to the agree-

ment. See United Steelworkers of America v.

United States Gypsum Co., 492 F.2d 713, 731l-

732 and cases cited therein (5th Cir. 1974).

Where disagreement existed concerning the

meaning of the term "all theatres contracted

herein" in Article I, section 1 of the

collective bargaining agreement, especially

Appendix -14-

in light of Union Exhibits 1, 5, & 9, a

dispute existed between the parties con-

cerning “application or interpretation" of

the agreement, and the matter was one to

be resolved by the arbitrator. See Haig

Berberian, Inc. v. Cannery Warehousemen,

535 F.2d 496, 499 (9th Cir. 1976). In

order to render an informed judgment on

the applicability of the agreement, it was

entirely proper, necessary in fact,. for

the arbitrator to consider all relevant

evidence in arriving at a decision on this

question. See United Steelworkers v.

Enterprise Corp., supra; Teamster Local

Unions v. Braswell Motor Freight Lines,

392 F.2d 1, 7 (9th Cir. 1968).

The Unions have included a prayer for

attorney's fees incurred in securing

enforcement of the arbitration award.

Absent a specific statute authorizing

award of attorney's fees or a showing of

bad faith by the losing party, the Union

cannot recover attorney's fees in this

litigation. See Alyeska Pipeline Service

Co. v. Wilderness Society, 421 U.S. 240,

247-271 (1975); General Drivers, Etc. v.

Sears, Roebuck & Co., 535 F.2d 1072 (8th

Cir. 1976). No statutory authority exists

Appendix -15-

for such an award. The record does not

Support a finding of bad faith. Accordingly,

neither party is entitled to an award of

attorney's fees in this action.

In accordance with the foregoing, it

is hereby ordered that the Unions' motion

for summary judgment is denied. The

arbitration award of Arbitrator Barsamian

dated August 10, 1977, is hereby confirmed.

Dated: July 14, 1978.

Samuel Conti

United States District Judge

1/ A petition to vacate arbitration award

was filed in the Superior Court in San

Francisco in December, 1977, by Syufy.

Pursuant to 28 U.S.C. §1441(b)the

petition was removed to this court.

Jurisdiction is founded upon Section

301 of the Labor Management Relations

Act, 28 U.&.C. §185.

2/ In the case at bar federal law is the

applicable body of law. International

Assoc. of Bridge etc. Workers v.

Superior Court, 80 Cal. App. 3d 346

(1978).

Appendix -16-

Filed August 10, 1977

Armon Barsamian, Arbitrator

IN ARBITRATION PROCEEDINGS PURSUANT

TO AGREEMENT BETWEEN THE PARTIES

In the Matter of a Controversy

between

NORTHERN CALIFORNIA STATE

ASSOCIATION OF I1.A.T.S.E.

LOCALS, for and on behalf

of its affiliated LOCAL UNION

NO. 241, ARBITRATOR'S

OPINION AND

SYUFY ENTERPRISES.

Involving 1) Whether or not the

Arbitrator has jurisdiction

Over Norwitt and Cine 21 and

Vallejo Auto Movies; and 2)

Whether Joint Exhibit No. l

applies to Cine 21 and Vallejo

)

)

)

)

)

)

)

)

)

)

and ) AWARD

)

)

)

)

)

)

)

)

)

Auto Movies. )

)

This Arbitration arises pursuant to

Agreement between NORTHERN CALIFORNIA STATE

ASSOCIATION OF I.A.T.S.E. LOCALS, for and

on behalf of its affiliated LOCAL UNION NO.

Appendix -17-

241, hereinafter referred to as the "Union",

and SYUFY ENTERPRISES, hereinafter referred

to as the "Employer" or "Syufy", under which

ARMON BARSAMIAN was selected to serve as

Arbitrator and under which his Award shall

be final and binding upon the parties.

Hearing was held June 2, 1977, in San

Francisco, California. The parties were

afforded full opportunity for the examina-

tion and cross-examination of witnesses,

the introduction of relevant exhibits, and

for argument. Both parties filed post-

hearing briefs.

APPEARANCE:

On behalf of the Union:

Messrs. VAN BOURG, ALLEN, WEINBERG

& ROGER, by MICHAEL B. ROGER, Esq.

45 Polk Street, San Francisco,

California 94102

On behalf of the Employer:

Messrs. ANGELL, ADAMS & HOLMES, by

SAMUEL L. HOLMES, Esq., 115 Sansome

Street, Suite 1400, San Francisco,

California 94104

Appendix -18-

ISSUES

Le Whether or not the Arbitrator

has jurisdiction over Norwitt

and Cine 21 and Vallejo Auto

Movies.

2 Whether or not Joint Exhibit

No. 1 applies to Cine 21 and

Vallejo Auto Movies; and, if

so, what should be the remedy?

FACTS

The Employer is a party to the Northern

Projectionists Master Agreement (Contract)

between the San Francisco Theatre Employers

Association (Association) and the Union.

The term of the present Contract is August

15, 1976, to November 15, 1980 (JX 1).

During the course of negotiations

leading to the present Contract, the status

of five theatres came into question as to

whether they should be included or excluded

from coverage under the Contract. Among

the five theatres are the Cine 21 and

Vallejo Auto Movies. So as not to hinder

negotiations, the parties agreed that the

“application of the Contract . . . is in

dispute, and/or subject to litigation, the

outcome of which will determine this issue."

Appendix -19-

(UX 5). A side letter was to have been

executed concerning those five theatres,

however, the December 28, 1976, letter

from counsel for the Union to the Associa-

tion Representative was never acknowledged

and accepted (UX 1). *

On April 15, 1976, the Employer leased

to Attorney David Norwitt, doing business

as Vallejo Enterprises, the two theatres in

question (EX 17 and EX 18). Also on April

15, the Employer and Norwitt executed what

is commonly referred to as an Administration

Agreement (EX 19). Among other things,

that Agreement provides that for a certain

fee, which is a percentage of the gross

receipts at each of the theatres, the

Employer will perform administrative

services which “". . . shall include, where

applicable, executive supervision of opera~

tions, negotiation for and entering into

*/ The fact the December 28, 1976, side

letter was never acknowledged and

accepted by the Association Represen-

tative is irrelevant and immaterial

as both parties signed Union Exhibit

5 on December 15, 1976, and that

Exhibit clearly indicates the inten-

tion of the parties.

Appendix -20-

contracts for pictures, buying of merchan-

dise, keeping of the account books and

records, and maintenance of a general office

of the Company in San Francisco." (EX 19,

Paragraphs 5 & 6).

The execution of the leases and Admin-

istration Agreement took place four months

prior to the termination of the predecessor

collective bargaining agreement between the

Association and the Union. On June 15,

1976, Norwitt wrote to John Forde of the

Union indicating, inter alia, that "I own

the Cine 21 of (sic) Valljo auto movies in

Vallejo, California. I would like to go on

record as stating that the San Francisco

Theatre Owners Association is not authorized

to negotiate for me insofar as a contract

is concerned." (UX 7). That letter led to

an exchange of correspondence between

Norwitt and counsel for the Union (UX 8, 9,

10 and 21 and EX 10 and 15). In his August

15, 1976, letter to counsel for the Union

(EX 15), Norwitt states, in part, "I do not

want to be bound by the industrywide

agreement. I am available at any mutually

convenient time to conduct negotiations.

Until we can conclude a new agreement, I

Appendix -2l1-

will continue with the terms of the present

contract."

The result of these communications was

that commencing on October 1, 1976, Norwitt

and the Union met in a series of negotiating

sessions in an attempt to arrive ata

collective bargaining agreement (EX 1

through EX6). Certain of these negotiating

sessions were concurrent with the negotia-

tions that were taking place between the

Association and the Union for a new

Contract. A few were subsequent to the

execution of the Contract in December 1976.

Although executed in December 1976,

the terms of the new Contract were retro-

active to August 15, 1976. The Vallejo

drive-in began paying the new Contract rates

and also picked up the retroactivity obliga-

tions. The Employer's evidence is that an

administrative error occurred which was

later corrected (EX 7).

On February 28, 1977, counsel for

Norwitt wrote to counsel for the Union and,

inter alia, advised:

Appendix -22-

"4. Since each party has rejected the

last offer of the other, and no

new offer is pending, we consider

the negotiations to have reached

an impasse.

"5. Please consider this letter a

formal notice that (as stated at

the meeting of February 24, 1977)

Mr. Norwitt will institute the

wages set forth in his last offer,

to wit, $5.00 per hour for the

regular projectionists and $4.25

per hour for the relief projec-

tionists, beginning with the

payroll period commencing March

16, 1977, with other provisions

of the contract remaining the

Same for a period of 18 months."

(EX 7).

On March 24, 1977, Norwitt wrote to

Alan Steuer, Controller for Syufy, and

requested that Syufy, as administrator of

Norwitt's payroll, institute the wage

changes cited above (EX 27). The wage

reductions were put into effect as directed

by Norwitt.

Shortly thereafter, the Union filed an

unfair labor practice charge in Case No.

20-CA-12596. On April 13, 1977, the

Regional Director for Region 20 of the NLRB

deferred action on the charge pursuant to

the Board's decision in Collyer Insulated

Appendix -23-

Wire, 192 NLRB no. 150 and its policy there-

under.

POSITION OF EMPLOYER

Jurisdiction

It is obvious that personal jurisdic-

tion over Norwitt does not exist. He has

not been served with a grievance; he has

not participated in any grievance procedure

that might imply submission to jurisdiction;

and no contract executed by him has been

produced by which he has agreed to submit

to the Arbitrator's jurisdiction. Juris-

diction over the theatres, which the Union

claims, is simply another way of claiming

jurisdiction over Norwitt.

There is no such thing as in rem

jurisdiction over the theatres. The

authority of an arbitrator is contractual.

It derives solely from the consent of the

parties to an agreement that he shall be

authorized under certain carefully circum-

scribed conditions to tell definitely what

their agreement means and what should be

done to comply with that meaning. Such

authority is strictly in personam. There-

fore, whether the Arbitrator can determine

Appendix -24-

that the Contract applies to the two

theatres depends on whether the jurisdiction

over Syufy under that Contract includes, by

the terms of the Contract itself, the power

to find that Syufy agreed that the Contract

applied to those two theatres and has not

acted accordingly. To do that it must be

shown first from the Contract itself that

Syufy and the Union mutually intended that

it should apply to the two theatres, and

second, that Syufy violated the Contract by

its arrangement with Norwitt. Only after

finding adverse to Syufy on those factual

issues would it be necessary or proper to

consider a remedy, which would be limited

to a direction to Syufy, not Norwitt.

For those reasons, this case boils down

to the questions of whether Syufy agreed,

by the execution of the Contract, to subject

the Vallejo theatres to its provisions, and

whether the operation of the theatres by

Norwitt is a fraud which can be disregarded

in order to find that Syufy is in fact the

employer of the projectionists.

On the Merits:

The Contract is not ambiguous. It

covers specified theatres, the Vallejo

Appendix -25-

houses not being among them. Syufy leased

the theatres effective April 15, 1976, four

months before the expiration of the old

agreement. Thus, they never became subject

to the 1976 Association negotiations. The

Union argued that they should have been and

reserved its right to so argue, but the

inclusion of employees in a bargaining unit

requires mutual affirmative agreement or an

NLRB order. Moreover, reserving the right

to argue about it is mere huffing and

puffing. Therefore, from the face of the

Contract itself, the grievance must be

denied.

There can be nothing more inconsistent

with the Union's claim in this case than

its actual negotiations with Norwitt. If

Syufy were the employer, and the Contract

applicable, the correspondence and bargain-

ing with Norwitt is wholly unexplainable.

It is inconceivable that this Union, repre-

sented by an intelligent and experienced

official and a highly skilled and respected

attorney, would participate in a purpose-

less charade for eight or nine months in

bargaining with Norwitt.

Appendix -26-

It was explained by Norwitt at the

first meeting with the Union that Syufy was

doing the bookkeeping, advertising and

general administration, but that the

managers of the theatres were paid by him

and did the hiring and the firing of the

employees. Moreover, although Forde

asserted, after three and a half months of

negotiations, that the Union's position

was that the arrangement was a subterfuge,

he was willing to take Norwitt's offer back

to the Union and the parties continued to

discuss a Norwitt contract.

At the hearing, the Union undertook to

prove that the theatres are in fact Syufy

theatres. In order to prove that, the

Union must show that the oepration by

Norwitt is a sham or an outright fraud. The

Union's offer of documents on the Syufy

letterhead as proof that the theatres are

actually Syufy operations was easily

explained away. Notices to projectionists

were necessary because they were directly

connected with the exhibition of pictures

booked under the Administration Agreement.

Sending the information through Norwitt,

rather than directly to the managers to

Appendix -27-

pass on what was relevant to the projec-

tionists, would have been slower and less

efficient without serving any useful

purpose. Additionally, the use of Syufy

uniforms and labeled confection containers

has rational bases. Such use served a

security purpose and saved Norwitt money.

A variety of sizes of uniforms (due to

turnover of ushers) requires a large

inventory of them. Actually, these things

had no relationship to the conditions of

employment of projectionists. If the use

of logos was misleading to all, the public,

not the projectionists, was misled, but the

Syufy symbol on a uniform meant no more

than a Ford symbol on the coveralls of a

mechanic employed by a Ford dealer. The

Syufy symbol on a popcorn container meant

no more than the name Hershey on a candy

bar. The logos on the popcorn boxes had

nothing to do with the establishment or

control of the labor management and labor

policy

Additionally, it must be noted that

the payrolls are made up from Norwitt time

cards, that Norwitt has his own employer's

identification from the Internal Revenue

Appendix -28-

Service, that they pay increase for projec-

tionists at one theatre was an error by a

bookkeeping clerk which was corrected by

reimbursement to Norwitt and that wages

were reduced at Norwitt's order. Also, the

record is uncontroverted that Syufy direc-

tives are provided the Norwitt manager, to

pass on to projectionists, at Norwitt's

request; that conditions of employment at

the Vallejo theatres are set by Norwitt;

that the administration arrangement gives

Norwitt the advantage of Syufy buying

power; that managers are selected with

Norwitt's approval; that managers hire and

fire in their own discretion; and that

ticket prices and the policy as to family

night have been determined by Norwitt ~

contrary to the Syufy prices and policy.

When it comes to labor relations,

Syufy was given no authority by Norwitt.

He assumed, with the consent of the Union,

the old agreement for the balance of its

term. He took the initiative to bargain

for a new one and expressly separated

himself from Association bargaining. He

retained the right to hire and fire. He

expressly arranged for the training of

Appendix -29-

managers. He had his own bank account and

checks for wage payments. He mace the

payments to the health and welfare funds.

He ordered wages reduced to his last offer

when negotiations reached an impasse. He

took the risks and responsibilities of an

employer, not Syufy.

For the Union to try to persuade the

Arbitrator to disregard all of the events

in months of correspondence and its actual

negotiating with Norwitt and to pretend

that the Syufy Contract really governed the

projectionists' employment at the two

Vallejo theatres all that time is asking

too much of credulity. If the Contract

covered these theatres, the Union would

have said so and filed an unfair labor

practice charge. If the Union really

believed that Syufy was the employer at

the Vallejo theatres, it would not have

bargained with Norwitt at all. The

Arbitrator has no jurisdiction over Norwitt

and cannot order him to apply tne Contract.

There is no proof that Norwitt is Syufy in

disguise rather than an independent

employer.

Appendix -30-

Therefore, the grievance must be denied.

POSITION OF UNION

Jurisdiction:

Syufy argues that the Arbitrator has

no authority or jurisdiction over Norwitt or

his Company that leases the two theatres.

Syufy does not deny that it is operating the

theatres virtually without any substantial

input from Norwitt. Thus, Syufy hires the

managers, establishes the booking and buying

policies, decides when and under what cir-

cumstances certain films are to be shown,

and holds these theatres out to the public

as if they were Syufy theatres.

Additionally, it must be noted that

this arbitration was held pursuant to both

a grievance filed under the Contract and

also pursuant to the deferral policy of the

NLRB under its Collyer Insulated Wire

decision. Among other things, it must be

noted that the deferral of an unfair labor

practice charge to arbitration under the

Collyer principle can only be made if all

parties to the charge agreed to proceed to

arbitration. The deferral letter from the

NLRB was issued on that basis, and, there-

Appendix -3l1-

fore, the Arbitrator has jurisdiction to

decide the merits of the case.

Om the Merits:

The critical issue which must be

determined in this arbitration is whether

or not Syufy, which admittedly operates

the two theatres in question, has violated

the Contract by failing to pay the wages

and other benefits established pursuant to

that agreement to the projectionists

employed at the two theatres since March

1977.

Syufy operates the theatres pursuant

to a so-called Administration Agreement in

which it has full and comrlete management

responsibilities for the booking, buying,

advertising and exhibiting of motion pic-

tures in these theatres. Moreover, it is

interesting to note that the labor relations

policies that are established at these

theatres are identical to Syufy's own

policies. Thus, Syufy attempted to impose

a policy concerning projectionists taking

certain days off, which policy was also

made applicable to the theatres in question.

In fact, as has not been controverted, all

Appendix -32-

the terms and conditions of employment

under the predecessor Contract remained in

full force and effect from April 1976,

until approximately March 1977, whereupon

the wages of the projectionists were

drastically cut. It is interesting to note,

furthermore, that the wage changes which

were supposed to have gone into effect as

of August 1976, were in fact implemented,

at least at one of the theatres, and

remained so until March 1977. The argument

that the wage change was made because of

some clerical error must be rejected.

Notwithstanding the claims by Norwitt,

it appears that the terms of the Old Contract

were fully honored for the remainder of its

term (April to August 1976), and thereafter

the terms of the new Contract were applied

at the Vallejo drive-in until March AVT7 i

It was at that point that the wages were cut

Substantially, and apparently certain fringe

benefit contributions ceased.

Clearly, the method and manner under

which these theatres are being operated

requires a conclusion that Syufy is the

Operator and must then Operate in accor-

dance with the Contract. For all intents

Appendix -33-

and purposes, both in fact and in law, the

theatres are operated as part of the Syufy

chain. What Syufy is attempting to do is

to avoid obligations under a collective

bargaining agreement to which it is

admittedly bound. The plain fact of the

matter is that Syufy operates these

theatres under either its management con-

tract or some other form as if they were

part of the Syufy chain with no changes

whatsoever occurring in the terms and

conditions of employment of the projec-

tionists.

Thus, the projectionists' employment

remained constant without any break, their

wages and other conditions remained the

Same for about ten months, and the only

difference that has been shown to have

occurred was that their pay checks were

given on a check bearing a different name

but with the same business address as

Syufy. In fact, nothing in the operations

of the theatres would appear to have

changed, and, most significantly, from

approximately April 1976, until March ADT?

nothing occurred relative to the wages,

hours, and terms and conditions of employ-

Appendix -34-

ment of the projectionists employed at these

theatres which would indicate that somehow

they were going to be treated differently

because of the lease agreements.

It is interesting to note that one of

the arguments raised by Syufy is that the

Administration Agreement is not unusual in

this industry. By making this argument,

Syufy apparently suggests that the mere

fact there is a management contract means

that they are no longer bound by the Contract.

What Syufy fails to point out, however, is

that under all the circumstances of where

it is operating as a manager of a theatre

in partial ownership with other enterprises,

the Contract is, nonetheless, being applied.

Thus, notwithstanding this apparent practice

in the industry, it must be noted that where

Syufy operates as a manager in Northern

California, the Contract is applied.

In this situation, Syufy has acted in

the same manner as another theatre employer

in Northern California did in Transcon-

tinental Theatres, Inc., 216 NLRB No. 187,

in which a theatre employer purported to

lease out its theatre to a partnership.

Appendix. -35-

The NLRB held that because of the method

and manner in which the arrangement took

place and the control that the lessor

Maintained over the operations of the

theatre, that such an arrangement was

contrary to the National Labor Relations

Act. Moreover, it has been held in this

circuit that an employer cannot avoid a

collective bargaining obligation by

ostensibly going out of business while in

fact retaining substantial control of the

enterprise. (See NLRB v. Lewis, 246 F.2d

886 (9th Circuit 1957).

In analogous situations in the con-

struction industry, the NLRB and the Courts

have held that close relationships between

two claimed separate companies have been

sufficient to establish that the collective

bargaining agreement of one may also be

applied to the operations of the others.

The key factors that must be analyzed are

the questions of control of day-to-day

Operations, interrelationship of the

business enterprise with others, control

of labor relations and the like. In this

case, it is obvious that except for the

fact that Norwitt is the lessee of the

Appendix -36-

premises, there is simply no evidence what-

soever that he is involved in the day-to-day

operations of the two theatres. Syufy has

total involvement in the operations and

management of the theatres, hires and fires

the employees and managers, and apparently

imposes its own policies upon the operations

of the theatres. It receives a fee for these

services and a percentage of the gross over

certain levels based upon the lease arrange-

ment. For all intents and purposes, Syufy

is attempting to use the subterfuge of a

lease and an Administration Agreement as a

means to avoid its obligations under the

Contract.

The facts of the matter are that the

projectionists were never informed of the

change in their employer, were never

terminated and never suffered any changes

in the terms and conditions of their

employment from approximately April 1976,

until March 1977. Furthermore, wage

increases which were due under the new

Contract were in fact applied, and as late

as February 1977, Syufy management direc-

tives were imposed upon the projectionists

working in these theatres. Save and

Appendix -37-

except the fact that the theatres are

apparently leased by Norwitt, there is

Simply no other connection between him

and these operations. And notwithstanding

purported terms of the Administration

Agreement to the contrary, it is obvious

that the labor relations and policies that

are established at these theatres are

identical to those that are established at

Other Syufy houses.

The grievance should be found meri-

torious and Syufy should be ordered to

reinstate all terms and conditions that

have been denied the projectionists and

to make them whole for any losses in pay

Or benefits which may have occurred

because of the Contract violations.

OPINION

Jurisdiction:

Clearly, the Arbitrator has no juris-

diction over Norwitt. He is not a party to

the Contract under which this arbitration

arises, he did not take part in the pro-

cessing of the grievance through the

Contract grievance procedure and he was not

a party to the arbitration itself.

Appendix -38-

Equally clearly, however, the Arbitra-

tor does have jurisdiction over Cine 21 and

Vallejo Auto Movies. Such jurisdiction

exists not only in consequence of the intent

of the parties during negotiations to have

the dispute concerning these theatres, as

well as others, determined outside of nego-

tiations, but also by way of the NLRB's

deferral policy under the Collyer decision.

Having expressed a willingness to arbitrate,

thereby allowing the NLRB to defer the matte:

pursuant to its deferral policy, the Employer

cannot now be heard to assert that the

Arbitrator lacks jurisdiction over the two

theatres in question.

Thus, while the Arbitrator does not

have jurisdiction over Norwitt, jurisdiction

does exist over Cine 21 and Vallejo Auto

Movies.

On the Merits:

The narrow view taken by the Employer

with respect to the Arbitrator's authority

is, under the particular facts and circum-

stances of this case, restrictive and

unreasonable. True, as a general proposi-

tion an arbitrator's authority flows from

Appendix -39-

and is limited to the collective bargaining

agreement between the parties. However, in

consequence of the very nature of this

dispute, it cannot be reasonably argued that

the Arbitrator must not venture beyond the

four corners of the Contract. To sustain

that argument would render illusory the

arbitration process in this dispute and

would fly in the face of the intent of the

parties during negotiations and the NLRB's

deferral to arbitration of the unfair labor

practice charge.

The Employer asserts, inter alia, that

the negotiations with Norwitt is inconsis-

tent with the Union's position in this case.

That argument is not persuasive. Certainly,

it is not unreasonable, indeed, it is quite

common, for alternative positions and/or

arguments to be advanced in a particular

dispute. Clearly, in an effort to avoid

possible protracted litigation, it was

reasonable for the Union to attempt to

Obtain an agreement with Norwitt. Had that

been accomplished, no dispute would now

exist. To say that its negotiations with

Norwitt were inconsistent with the Union's

present position is to assert that a party

Appendix -40-

must take one course of action without

resort to other avenues in an effort to

resolve a dispute. Moreover, the Union did

protect itself by reserving its rights as

it did.

When all is said and done, the case

really comes down to whether an employer,

by a Lease and Administration Agreement,

can avoid its obligations under a collective

bargaining agreement. Under the facts and

circumstances of this case, the Arbitrator

concludes that it cannot. Clear record

evidence exists that there has been no

Substantial change in the manner in which

the two theatres are operated. For the

most part, Syufy is doing precisely what it

did prior to the execution of the Leases

and Administration Agreement on April 15,

1976. The insubstantial input from Norwitt

clearly demonstrates that it is Syufy that

is operating these theatres in all respects,

notwithstanding the limitation as regards

labor relations matters.

Additionally, if inconsistencies do

exist in this case they exist with equal

force from the Employer's point of view as

Appendix

from the Union's. Thus, approximately two

weeks after execution of the Leases and

Administration Agreements, the Union asked

for certain information in preparation for

negotiations (UX 6(a)). In answering that

request, Syufy listed 35 theatres, including

the two theatres involved herein. Moreover,

approximately one month after execution of

the Leases and Administration Agreements,

Syufy's Director of Operations sent the

information requested by the Union concern-

ing the wages, hours and gross pay of the

projectionists at the particular theatres,

and included therein was such information

with respect to the projectionists at the

two theatres involved in this dispute.

(UX 6(e)).

Moreover, it is interesting to note

that some two and a half months after execu-

tion of the Leases and Administration

Agreement, Syufy executed an agreement

dated June 29, 1976, between it and the

City of Vallejo having to do with certain

restrictions to the Business License issued

by the City (EX 25, Item 1). Those restric-

tions were not acknowledged by Norwitt

until August 6, 1976, some four months

~~?

Appendix -42-

after execution of the Leases.

Record evidence does exist that such

Administration Agreements as are involved

herein are common in the industry; however,

it is uncommon in the industry for

theatres subject to such Agreements to be

withdrawn from coverage under the Contract.

Indeed, at least one such attempt under

like facts and circumstances has been

rejected by the NLRB. See Transcontinental

Theatres, Inc., 216 NLRB No. 187. With the

exception of signing payroll checks and

insignificant, indeed almost nonexistent,

input from Norwitt with respect to the

Operations of the theatres and labor rela-

tions matters, Syufy's control and manage-

ment over the operations of the two

theatres has not substantially changed.

Thus, in consequence of the Employer's

substantial day-to-day control over the

Operations of the theatres in question, the

Contract applies to Cine 21 and Vallejo

Auto Movies. Syufy shall reinstate all

terms and conditions that have been denied

the projectionists at the two theatres and

Shall make them whole for any losses in pay

™~

Appendix -43-

or benefits which may have occurred.

AWARD

The Arbitrator does not have jurisdic-

tion over Norwitt. The Arbitrator

does have jurisdiction over Cine 2l

and Vallejo Auto Movies.

Joint Exhibit No. 1 applies to Cine 21

and Vallejo Auto Movies. Syufy shall

reinstate all terms and conditions

that have been denied the projectionists

at the two theatres and shall make them

whole for any losses in pay or benefits

which may have occurred.

Dated: August 10, 1977.

ARMON BARSAMIAN

Arbitrator