Appendix — United Food & Commercial Workers International Union v. John Morrell & Co.

rer E”*

FiLvceéedD

MAR & 1991

IN THE

Supreme Court of the United States

OCTOBER TERM, 1990

UNITED Foop Aro COMMERCIAL WORKERS

INTERNATIONAL UNION AND ITS Local 304A

a Petitioners,

JOHN MokRELL & Co.,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Eighth Circuit

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI

LAURENCE GOLD

(Counsel of Record)

DAVID SILBERMAN

815 16th Street, N.W.

Washington, DC 20006 =

(202) 637-5390

GEORGE MURPHY

NICHOLAS W. CLARK

RICHARD ROESEL

1775 K Street, N.W.

Washington, DC 20006

DONALD SHULTZ

9th & St. Joe

First Federal Plaza

Rapid City, SD 57709

WILSON - Eras Printing Co., Inc.

- 789-0096 - WasHincron, 0. C. 20001

@ Ee

)

TABLE OF CONTENTS

APPENDIX A

Opinion of the United States Court of Appeals for

the Eighth Circuit, September 7, 1990

APPENDIX B

Memorandum Opinion and Order Vacating Arbi-

trator's Award of the United States District Court,

District of South Dakota, March 15, 1989

APPENDIX C

Order of United States District Court, District of

South Dakota, May 18, 1988

APPENDIX D

Opinion of the United States Court of Appeals for

the Eighth Circuit, October 30, 1986

APPENDIX E

Memorandum Opinion and Order of the United

States District Court, District of South Dakota,

August 29, 1986

APPENDIX F

Order of the United States Court of Appeals for

the Eighth Circuit, December 6, 1990

APPENDIX G

Judgment of the United States Court of Appeals

for the Eighth Circuit, September 7, 1990

APPENDIX H

Award of Arbitrator William Rentfro, November

5, 1988

APPENDIX I

Order of Arbitrator Granting UFCW's Motion For

Further Relief, December 31, 1990

Page

In

46a

57a

70a

108a

la

APPENDIX A

UNITED STATES COURT OF APPEALS

EIGHTH CIRCUIT

Nos. 89-5109, 89-5152

JOHN MORRELL & COMPANY,

. Appellee,

LOCAL UNION 304A OF THE UNITED Foop AND COMMER-

CIAL WorKeERS, AFL-CIO; UNITED Foop AND Con-

MERCIAL WORKERS INTERNATIONAL UNION, AFL-CIO

and CLC; DENNIS Foster, Individually and in his ca-

pacity as president of defendant Local 304A; JAMEs R.

Lyons, Individually and in his capacity as Business

Representative and Corresponding Secretary of defend-

and Local 304A; JOHN Dok and OTHER PERSONS UN-

KNOWN,

Appellants,

JOHN MORRELL & COMPANY, a corporation,

= Appellee,

LocaL UNION 304A OF THE UNITED Foop AND COMMER-

CIAL Workers, AFL-CIO and CLC; UNITED Foop and

COMMERCIAL WORKERS INTERNATIONAL UNION, AFL-

C10 and CLC,

Appellants.

Submitted Dec. 13, 1989

Decided Sept. 7, 1990

Before MCMILLIAN, JOHN R. GIBSON and BOW-

MAN, Circuit Judges.

2a

JOHN R. GIBSON, Circuit Judge.

The Unions representing workers at John Morrell &

Company's plant in Sioux Falls, South Dakota appeal a

$24.6 million jury award entered against them in favor

of Morrell. The jury found that the Unions had breached

the no-strike clause of the parties’ collective bargaining

agreement by engaging in sympathy strikes. The district

court,’ 708 F.Supp. 273, entered judgment for Morrell and

also vacated an arbitration award, issued between the lia-

bility and damages phases of the bifurcated jury trial,

that had held that the no-strike clause did not bar sym-

pathy strikes. The Unions now appeal and argue that the

district court erred by: (1) submitting the issue of

whether the collective bargaining agreement prohibited

sympathy strikes to the jury; (2) making various rul-

ings during the damages phase of the trial; and (3) va-

cating the arbitration award. We affirm the judgment of

the district court.

Morrell operates a meat packing business and has

plants at various locations, including Arkansas City,

Kansas; Sioux City, lowa; and Sioux Falls, South Dakota.

Both Local 304A of the United Food and Commercial

Workers, and the United Food and Commercial Workers

International Union ‘collectively the “Unions”) represent

the Sioux Falls employees. On July 1, 1986, the Arkansas

City workers went on a lawful strike designed to secure

a new collective bargaining agreement with Morrell. To

increase the economic pressure on Morrell, Arkansas City

employees traveled to the Sioux Falls plant and estab-

lished picket lines there on August 4 and 15, 1986. On

both occasions, the Sioux Falls workers honored these

picket lines and refused-to report to work.

Morrell then sought to enjoin the Sioux Falls employees

from striking under section 301 of the Labor Management

— —

The Honorable Richard H. Ratten, United States District Judge

for the District of South Dakota,

3a

Relations Act, 29 U.S.C. § 185 (1988). Morrell alleged

that the Sioux Falls employees breached the no-strike

provision of their collective bargaining agreement by

honoring the picket line established by the Arkansas City

employees. The clause provides that:

Provisions having been made by this Agreement

and local agreements for the peaceful and orderly

settlement of any disputes which may arise between

Company and the Union or local Unions or any Em-

ployee or Employees, it is agreed that during the

term of this Agreement there shall be no strike step-

page, slowdown, or suspension of work on the part

of the Union or any local Union or any Union mem-

ber or lockout on the part of the Company on account

of such disputes until after an earnest effort shail

be made to settle all such matters in the manner

provided in the respective agreements,

(1985-88 Sioux Falls Collective Bargaining Agreement,

Article II, el. 4).

After an expedited evidentiary hearing, the district

court «ranted Morrell preliminary injunctive relief. Upon

expedited appeal to this court, we vacated the injunction *

— —

2 Selected provisions of the Sioux Falls collective bargaining

agreement are set out in an Addendum following this opinion.

The district court found that the August 15 strike was not a

sympathy strike but was actually a protest over Morrell’s discipl-

nary actions toward workers who had honored the August 4 strike.

Since the court found that this was a strike ever an arbitrable

grievance, it could be enjoined under the narrow exception to the

statutory prohibition against enjoining strikes announced in Boys

Markets v. Retail Clerks Union, Local 779, aun U.S. 235, 255, 90 S.Ct.

1588, 1594, 26 I. Ed 2c 199 (1970). Upon appeal, this court found

“no evidence in the record” to support the district court's conelu-

sion that the August 15 strike was not a sympathy strike. John

Morrell & Coa. . Local Union 104A of the United F 4 Commer

cial Workers, 804 F.2d 457, 461-62 (Sth (ir. 16 (per curiam),

cert. denied, 481 U.S. 1014, 107 S.Ct. 1889. 95 L.Ed.2d 496 (1987).

4a

because the strikes were sympathy strikes,“ as opposed to

economic strikes, and thus could not be enjoined under

the Norris-LaGuardia Act, 29 U.S.C. 8 104 (1988). John

Morrell & Co. „. Local Union 304A of the United Food

& Commercial Workers, 804 F.2d 457 (Sth Cir.1986)

(per curiam), cert. denied, 481 U.S. 1014, 107 S.Ct.

1889, 95 L. Ed.2d 496 (1987). After remand to consider

Morrell’s claim for damages, and while discovery was in

progress, employees of the Sioux City, Iowa plant also

commenced a lawful strike in an effort to obtain a new

collective bargaining agreement. The Sioux City workers

picketed the Sioux Falls plant, as the Arkansas City

workers had done, and the Sioux Falls workers again

honored the picket line. This strike at the Sioux Falls

plant lasted from May 1 to November 4, 1987. Morrell

then filed an amended complaint seeking damages based

on that most recent strike, and that case was consolidated

with the other pending actions.

Upon the Unions’ motion for summary judgment, the

district court * ruled both that the refusal by the Sioux

Falls workers to cross the pici.et line in 1987 was a

sympathy strike in support of the Sioux City workers,

as opposed to an economic strike, and that it was for a

jury to decide whether the collective bargaining agree-

ment barred such strikes. The case was then transferred

to the Western Division of the District of South Dakota

where the court reconsidered the Unions’ motion for

summary judgment and held that a jury should decide

both: (1) whether the 1987 strike was a sympathy strike;

*An economic strike is a “cessation of work by employees to

enforce economic demands upon the employer ia contrast to a strike

caused by an unfair labor charge.” Black's Law Dictionary 1276

(5th ed.1979). “A sympathy strike involves two unions; one is strik-

ing to force some concession from the employer; the other strikes in

sympathy with the first’s objectives. Sympathy strikes are a com-

mon manifestation of traditional union solidarity.” Id.

5 The Honorable John B. Jones, United States District Judge for

the District of South Dakota.

5a

and (2) whether the no-strike provision of the collective

bargaining agreement prohibited sympathy strikes.

The case then proceeded to trial before a jury. The

Unions moved for a directed verdict based upon their as-

sertion that, as a matter of law, the collective bargaining

agreement did not bar sympathy strikes. The motion

was denied. The case was submitted to the jury on

special interrogatories and, on March 10, 1988, the jury

returned a verdict for Morrell on liability because it

found that: (1) the 1987 strike was a sympathy strike;

and (2) the Sioux Falls workers were prohibited from

engaging in sympathy strikes by the no-strike provision

in the agreement.

After the 1987 sympathy strike had concluded, but

before this jury verdict, the Sioux Falls workers sought

to return to work and replace the workers hired in their

absence. Morrell refused to recall the strikers. The

Unions filed grievances on behalf of these workers in

which they argued that the collective bargaining agree-

ment permitted sympathy strikes and that the agree-

ment’s seniority provisions required Morrell to rehire the

sympathy strikers in place of less-senior replacements.

Morrell denied the grievances, and the Unions sought

arbitration of the issue.

After the liability phase of the jury trial had con-

cluded, but during the damages phase of the trial, the

arbitrator issued an award in favor of the Unions which

sustained the grievances. Despite the earlier jury ver-

dict that the no-strike clause prohibited sympathy strikes,

the arbitrator independently examined the meaning of

the no-strike clause and concluded that it did not waive

the workers’ right to engage in sympathy strikes. Based

upon this ruling, the arbitrator held that the strikers

were entitled to exercise their seniority rights and re-

place the workers hired during the sympathy strike.

The arbitration award was issued on November 5,

1988, and the damages phase of the jury trial concluded

6a

on November 10, 1988. The jury awarded Morrell $24.6

million in damages based upon lost profits during the

strike.

Morrell then filed a motion to vacate the arbitration

award and the Unions filed a motion to enforce the

award. The two actions were consolidated. The district

court vacated the award because it held that the arbi-

trator had exceeded his authority by deciding the issue

of the legality of sympathy strikes since Morrell had not

consented to arbitrate that issue. Alternatively, the court

held that the award should be set aside Lecause the

doctrine of res judicata bound the aribtrator to the jury's

resolution of the issue during the liability phase of the

trial. The Unions now appeal the court’s judgment va-

cating the arbitration award. We will discuss their ar-

guments and provide further factual details as raised

in the context of these issues.

The Unions contend that the district court should not

have allowed the jury to determine the legal effect of the

no-strike clause on the Sioux Falls workers’ right to

engage in a sympathy strike. They advance several argu-

ments in support of this contention and we will consider

each in turn. They also challenge the court’s ruling that

a Morrell internal memorandum offered into evidence by

the Unions was protected by attorney-client privilege.

A.

We begin by determining the effect of our earlier deci-

sion, 804 F.2d 457, on the issues raised in this appeal.

The Unions urge that this earlier opinion held that the

Sioux Falls collective bargaining agreement did not bar

their right to participate in sympathy strikes. They spe-

cifically rely upon the following language: “To the extent

that the district court found that the first strike was a

sympathy strike, that the parties’ no-strike clause did not

8a

ings made by the district court, we apply the clearly

erroneous standard. Judicial precedent supports our con-

clusion. See Local Union No. 150-A, United Food &

Commercial Workers Intl Union v. Dubuque Packing

Co., 756 F.2d 66, 69 (8th Cir.1985); Press Mach. Corp.

vu. Smith R. P. M. Corp., 727 F.2d 781, 784 (8th Cir. 1984);

Motor Carriers Council v. Local No. 600, Affiliate of Int’l

Bhd. of Teamsters, 486 F.2d 650, 653 (8th Cir.1973).

Moreover, the cases cited by Morrell are not inconsistent

with our conclusion. See Arkansas Rice Growers Coop.

Ass’n „. Alchemy Indus., 797 F.2d 565, 567 (8th Cir.

1986) (stating that the construction of a contract is a

question of law but review of disputed extrinsic evidence

is governed by the clearly erroneous standard); Landro

„. Glendenning Motorways, 625 F.2d 1344, 1352 (8th

Cir.1980) (examining factual findings under the clearly

erroneous standard after determining that the contract

was ambiguous).

C.

We now apply these standards to the issues before us.

The Unions assert that the district court should not have

submitted the question of whether the no-strike clause

barred sympathy strikes to the jury or admitted extrinsic

evidence for interpretive purposes because the clause is

unambiguous. They also assert that the evidence was

insufficient to support a verdict in favor of Morrell. We

believe it would be helpful at this point to set out some

basic principles of contract law and labor law to aid in

our resolution of these issues.

Extrinsic evidence may not be considered “for the

purpose of showing that the parties intended to make an

agreement which is inconsistent with the unambiguous

words of their written contract.” St. Louis Union Trust

Co. „. United States, 617 F.2d 1293, 1300 (8th Cir.1980).

Although extrinsic evidence may not be admitted to con-

tradict the parties’ intentions as expressed in the writing,

it can be admitted to demonstrate that ambiguity exists.

Press Mach. Corp., 727 F.2d at 784-85; S. Williston, A

ga

Treatise on the Law of Contracts § 600A, at 299-310 (3d

ed. 1961). To determine whether there is an ambiguity,

we must examine the relevant extrinsic evidence and de-

cide whether the contractual language is reasonably sus-

ceptible of the meaning proposed by the party asserting

the ambiguity. The Realex Chemical Corp. v. S.C. John-

son & Son, 849 F.2d 299, 302 (8th Cir.1988). If we

decide that the language is ambiguous, then resolution of

the ambiguity is a question of fact to be determined by

the jury. Thomas v. Bakery, Confectionery & Tobacco

Workers Union Local No. 433, 826 F.2d 755, 764 (8th

Cir.1987), cert. denied, 484 U.S. 1062, 108 S.Ct. 1019,

98 L.Ed.2d 984 (1988); Press Mach. Corp., 727 F.2d at

784: Williston, supra § 616, at 652. The jury may prop-

erly consider extrinsic evidence in resolving the ambi-

guity.“ Press Mach Corp., 727 F.2d at 784.

We must apply these principles of contract law in the

context of the labor law principles implicated here. See-

tion 7 of the National Labor Relations Act, 29 U.S.C.

£157 (1988), generally grants employees the right to

engage in sympathy strikes in support of a lawful strike

by another union.“ Amcar Div., ACF Indus. v. NLRB,

641 F.2d 561, 566 (Sth Cir. 1981). This right may be

waived expressly or impliedly; however, an implied waiver

must be established only by “clear and unmistakable” evi-

dence. Metropolitan Edison Co, v. NLRB, 460 U.S. 693,

708. 103 S.Ct. 1467, 1477, 75 L.Ed.2d 387 (1983). “In

The Unions appear to argue that juries may use extrinsic evi-

dence to interpret only unconditional, but not conditional, no-strike

clauses. We see no basis in the law for such a distinction

7 It is not certain that this right extends to situations where the

picket line is unrelated to the union that wants to honor it. See

trod. Through the Window of Le gislative History: A View on the

Employees’ Statutory Riaht to Honor a Stranger Picket Line, 35

Kansas L.Rev. 9, 31 (1986) (suggesting that the Eighth Circuit, in

NLRB v. L.G. Everist, Inc., 334 F.2d 312 (Sth Cir. 1964), appears

to have decided that honoring a stranger picket line is not protected

by the National Labor Relations Act).

— —

lOa

determining whether there has been a waiver of the right

to enguge in sympathy strikes, the collective bargaining

agreement must be interpreted as a whole and in light

of the law relating to it when made.” Amear, 641 F.2d

at 566-67. Amear also instructs us that:

There are a number of relevant facts to examine in

determining whether the Union intended to waive its

right to engage in sympathy strikes. We look to the

language of the contract, the structure of the con-

tract, the bargaining history, and any other relevant

conduct of the parties that shows their understand-

ing of the contract.

Id. at 567. See also lowa Beef Processors „. Amalqa-

mated Meat Cutters, 597 F.2d 1138, 1144 (Sth Cir.)

‘examined language, external circumstances, and policy

considerations to determine whether the right had been

Waived), cert. denied, 444 US. 840, 100 S.Ct. 79. 62

I. Ed.2d 52 (1979).

Thus, we must next decide whether the no-strike clause

is “ambiguous” in the sense that it is reasonably sus-

ceptible of the meaning proposed by Morrell, namely, that

the Unions, in clear and unmistakable terms. waived

their right to engage in sympathy strikes. Once we de-

termine that the language is susceptible of this interpre-

tation, then the issue is submitted to the jury to resolve

»The jury instruction, which the parties did not object ta, cor-

rectly required Morrell to prove, by a preponderance of the evidence,

that the Unions had clearly and unmistakably waived their right to

engage in sympathy strikes. The instruction provided, in part, that:

Even if you should decide that the strike was in fact a sym-

pathy strike, the plaintiff Morrell may still be entitled to a ver-

dict should you find by a preponderance of the evidence that

the defendants, clearly and wnm istakably, waived, relinquished,

or gave up the right to engage in such sympathy strikes when

they signed a collective bargaining agreement with Morrell

November 20, 1988.

In determining this issue you are entitled to examine the

contract language, the structure of the contract, the bargaining

lla

the ambiguity and decide if waiver has occurred. The

Unions rely upon Barrett v. Safeway Stores, 538 F.2d

1311, 1313 (Sth Cir.1976) (per curiam), for the prop-

osition that the contractual language here were unam-

biguous as a matter of law. We reject the comparison.

Flor an unresolved ambiguity to constitute a genuine

factual issue, we believe that the record as a whole must

permit a rational trier of fact to find for the nonmoving

party.” Realer, 849 F.2d at 302. As stated previously,

we may review extrinsic evidence in making this deter-

mination and, upon doing so, we are convinced that this

standard was satisfied.

The Unions argue that an examination of extrinsic

evidence still does not yield an ambiguity. They contend

that the no-strike provision is expressly linked to the

grievance-arbitration procedure and, therefore, it applies

only to strikes over arbitrable disputes. The arbitrator,

who considered the meaning of the no-strike clause as

well as the recall issue, was persuaded by this “cotermi-

nous application” argument. He stated that:

This clause clearly references and contemplates a

direct connection with the arbitration provisions of

the contract. It states that provisions have been

made for “peaceful and orderly settlement of any

disputes” which may arise between the Company

and the Union. It then states “there shall be no

strike . . on account of such disputes.” ... Thus,

the contract itself expresses the doctrine of cotermi-

nous application. If this were not enough—and the

Arbitrator thinks it is—the contract also conditions

the promise not to strike on exhaustion of contrac-

tual efforts to settle the dispute. Since there are no

available means under the contract for settling a

primary dispute involving a separate bargaining

history and other relevant evidence which the Court admits for

your consideration on the issue of the intent of the parties

(Appellant’s Appendix, Vol. I, at 124) (emphasis added).

12a

unit with an expired contract, sympathy strikes are

clearly allowed.

(Award of Arbitrator, Nov. 5, 1988, at 16-17) (em-

phasis added).

We are not similarly convinced. The doctrine of co-

terminous interpretation arose in the context of collec-

tive bargaining agreements that contained an arbitra-

tion clause but lacked an express no-strike clause. In

Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95, 82

S.Ct. 571, 7 L.Ed.2d 593 (1962), the parties’ agreement

did not have a no-strike provision, but the Supreme

Court nevertheless held that the express arbitration

clause created an implied duty not to strike over disputes

subject to arbitration. Id. at 105, 82 S.Ct. at 577. The

union in Lucas Flour was thus liable for damages flow-

ing from breach of the implied duty to refrain from

striking. The Supreme Court has also applied the doc-

trine of coterminous interpretation in the injunction con-

text to hold that an agreement, containing an arbitration

clause but not a no-strike clause, created an implied no-

strike duty and, therefore, that a court could enjoin the

strike. Gateway Coal Co. v. UMW, 414 U.S. 368, 382,

94 S.Ct. 629, 639, 38 L.Ed.2d 583 (1974).

These decisions, however, do not compel the conclusion

that the doctrine of coterminous interpretation applies

to the situation before us. We are not faced with an

agreement lacking a no-strike clause, as in Lucas Flour,

nor do we have to determine the availability of injunctive

relief, as in Gateway Coal. The issue confronting us is

whether the parties’ express no-strike provision has been

breached so that the Unions are liable for damages. The

Supreme Court has recognized that a strike which is not

subject to injunction under the Norris-LaGuardia Act

may nevertheless violate the parties’ no-strike clause and

subject the striking party to other remedies, such as dam-

ages. Buffalo Forge Co. . United Steelworkers, 428 U.S.

397, 410-11, 96 S.Ct. 3141, 3148-49, 49 L.Ed.2d 1022

13a

(1976). See also Jacksonville Bulk Terminal v. Interna-

tional Longshoremen’s Ass'n, 457 U.S. 702, 721-22, 102

S.Ct. 2672, 2684-85, 73 L.Ed.2d 327 (1982) (stating that

the issue of whether the strike was enjoinable is separate

from the issue of whether the no-strike clause was vio-

lated.

In light of this precedent, we have previously distin-

guished between express and implied no-strike clauses,

and held that the coterminous interpretation doctrine

limited the effect of no-strike clauses to arbitrable dis-

putes only in the latter case.“ Jowa Beef Processors, 597

F.2d at 1145. If an agreement contains an express no-

strike clause, then “the no-strike provision must be in-

terpreted in light of the whole contract, rather than by

looking only to the arbitration clause.” Id. We stated

that the issues raised by the arbitration and no-strike

clauses remained analytically distinct, id., and further

stated that, [u]ltimately, each depends on the intent of the

contracting parties.” Jd. (quoting Gateway Coal Co. v.

Other circuits have also reached this conclusion. The Sixth

Circuit, in Ryder Truck Lines v. Teamsters Freight Local Union

No. 480, 727 F.2d 594 (6th Cir.) (en banc), cert. denied, 469 U.S.

825, 105 S.Ct. 103, 83 L.Ed.2d 48 (1984), provides an excellent dis-

cussion of the doctrine of coterminous application and concludes that

“no-strike clauses need not be construed narrowly to prohibit strikes

only over arbitrable disputes.” Id. at 601. The court declared that:

Indeed, to hold that no-strike clauses must be construed as

prohibiting only strikes over arbitrable issues would under-

mine the fundamental premise of freedom of contract on which

federal labor policy is based by undercutting management's

ability to obtain “an across-the-board no-strike clause and

labor’s ability to gain concessions in return for such a pledge.”

Id. (quoting Pacemaker Yacht Co. v. NLRB, 663 F.2d 445, 460 (3d

Cir.1981)). In United States Steel Corp. r. NLRB, 711 F.2d 772

(7th Cir.1983), the Seventh Circuit held that the question of

whether a no-strike clause barred sympathy strikes was to be

answered by examining the contract and bargaining background,

rather than by applying the principle of coterminous application.

Id. at 776-78.

l4a

UMW, 414 U.S. 368, 382, 94 S.Ct. 629, 639, 38 L.Ed.2d

583 (1974)+. We do not believe that the Jowa Beef

Processors holding is limited to cases involving broad no-

strike clauses. Such a litmus test would not yield a result.

founded upon the intent of the parties.

The cases cited by the Unions do not require a contrary

conclusion. While Gary Hobart Water Corp. v. NLRB,

511 F.2d 284 th Ciro, cert. denied, 423 U.S. 925, 96

S.Ct. 269, 46 I. Ed.2d 252 (1975), applied the doctrine of

coterminous interpretation to an express no-strike clause,

that case must be read in light of the Seventh Circuit’s

later decision in United States Steel Corp. „. NLRB, 711

F.2d. 772 (7th Cir. 1983), where the court refused to

apply the doctrine when the extrinsic evidence indicated

that the parties intended otherwise. /d. at 778-80. Simi-

larly, in Pacemaker Yacht Co. „. NLRB, 663 F.2d 455

(3d Cir.1981), the Third Circuit refused to interpret

a no-strike clause coterminously with the arbitration

clause after examining the agreement as a whole, the

statements of union officials, and the state of the law

when the agreement was executed. Id. at 458-59. Sce

also NLRB v. Gould, Ine, 638 F.2d 159, 164 (10th Cir.

1980) (applying the coterminous interpretation doctrine

to an express no-strike clause after finding that there

was no extrinsic evidence to indicate that the parties

intended to the contrary}, cert. denied, 452 U.S. 930,

101 S.Ct. 3065, 69 L.Ed.2d 430 (1981).

We are satisfied that the doctrine of cotermious ap-

plication does not govern our interpretation of the no-

strike clause before us. Rather, we are to determine the

scope of the clause by examining the language of the

agreement and the external circumstances of the contro-

versy. /owa Beef Processors, 597 F.2d at 1144.

We now turn to the extrinsic evidence offered by

Morrell in support of its interpretation of the no-strike

clause. At a hearing before the district court, Morrell

identified other provisions of the collective bargaining

l5a

agreement indicating that the parties wanted the no-

strike provision to apply to sympathy strikes. Paragraph

3 of Article Il of the agreement declares that the agree-

ment shall “establish the means to facilitate peaceful

adjustments of all grievances or other disputes that may

arise between the Company and th Union.” (Emphasis

added}. The Unions claim that this language is merely

hortatory, but we are not convinced. It is well-established

that, “|ijnterpreting a collective bargaining agreement,

. . We must construe the contract as a whole.“ Amcar,

641 F.2d at 569. See also United States Steel Corp., 711

F.2d at 778 ‘examining the introductory provisions of

the collective bargaining agreement to determine the

parties’ intent in a no-strike clause).

Morrell also argues that the “struck work” clause in

paragraph 6 of Ariicle I] supports its interpretation.

This provision allows Sioux Falls workers to refuse to

perform work transferred from striking plants of other

employers but expressly obligates the workers to accept

work transferred from another Morrell plant which is on

strike. That protection would be rendered meaningless

if Sioux Falls employees could avoid their contractual

duty to accept work from striking plants by simply

engaging in a sympathy strike.

Furthermore, Morrell supported its position by pre-

senting evidence of the parties’ bargaining history. There

was evidence that a union negotiator believed that the

earlier no-strike clause, which was in effect from 1954

to 1056, barred all strikes. In 1956, Morrell proposed the

no-strike clause which is currently in effect and before

this court. It would be irrational to suggest that Morrell

intended to limit the reach of the no-strike clause rather

than maintaining the status quo.

In sum, we are satisfied that Morrell presented suffi-

cient extrinsic evidence to establish that the no-strike

clause was susceptible to the meaning that it proposed.

Therefore, the district court properly allowed the jury to

l6a

decide the issue of whether the Unions waived their right

to engage in sympathy strikes in clear and unmistakable

terms.

Alternatively, the Unions argue that the jury’s verdict

was not supported by the evidence. In considering this

challenge, we must bear in mind that “evidence is to be

considered in the light most favorable to the verdict,”

Cerro Gordo Charity v. Firemen’s Funded Am. Life Ins.

Co., 819 F.2d 1471, 1485 (8th Cir.1987), and that we

may overturn the jury’s verdict only if “the evidence is

suspectible to no reasonable inferences sustaining it,“ id.

Under this demanding standard, our review of the evi-

dence compels us to conclude that the jury verdict must

stand.

Morrell provided evidence of the 1982 and 1985 contract

negot int ions.“ During the 1982 negotiations, a Morrell

negotiator stated that the company was considering pro-

posing a change to the no-strike provision because of

unauthorized strikes at other plants. A negotiator for

the Unions responded that the current no-strike clause

sufficiently protected the company. Morrell’s negotiator

then agreed that no changes were needed. While the

Unions argue that this discussion referred to wildcat

strikes and slowdowns, and not to sympathy strikes, it

nevertheless evidences the parties’ intent to resolve dis-

putes through the grievance and arbitration process and

to avoid strikes.

Evidence of the 1985 negotiations is even more power-

ful. There was testimony that the Unions repeatedly

proposed changes in the collective bargaining agreement

which would explicitly permit sympathy strikes. All such

The Unions complain that Morrell failed to present any evi-

dence of the circumstances in 1956 leading to the inclusion of the

current no-strike clause. We have recognized, however, on a previ-

ous occasion, that the reasons for lack of change may be more

significant than the circumstances surrounding the origina! negotia-

tions. Amcar, 641 F.2d at 567.

17a

proposals were rejected by Morrell. Morrell adamantly

refused such requests because the changes would essen-

tially eviscerate Article I] of the agreement.

The Unions concede that they sought to insert language

permitting sympathy strikes and barring the transfer of

work from plants on strike. They contend, however, that

such changes were sought for all employees of packing

houses represented by the International and local unions.

They also argue that such proposals were not admissions

but merely manifested a desire for explicit assurance of

pre-existing rights. We note initially that this argument

uppears to indicate that the language was ambiguous.

Regardless, we have previously declared that “an attempt

by the Union to add such a [sympathy strike] provision

is significant in inferring that the Union waivled]

its right to engage in sympathy strikes.“ Amear, 641

F.2d at 567 (citing NLRB v. Rockaway News Supply Co.,

345 U.S. 71, 79-80, 73 S.Ct. 519, 524-25, 97 L.Ed. 832

(1953)), which considered the union’s proposal to ex-

pressly permit refusals to cross a picket line as evidence

of the parties’ intent in their no-strike clause). These

arguments were before the jury, and when we view this

evidence in the light most favorable to the verdict, we

conclude that the jury’s verdict must be sustained.

D.

The Unions also challenge an evidentiary ruling that

the district court made during the liability phase of the

trial. The court held that an internal memorandum writ-

ten by Morrell’s general counsel, which came into the

Union's possession because of another lawsuit, was pro-

tected by attorney-client privilege. We affirm the court's

ruling on this issue.

Prior to the action before us, a group of Morrell em-

ployees at another plant brought a class action against

Morrell and the United Food and Commercial Workers

International Union, one of the unions involved in this

18a

appeal, concerning a plant closing. See Aguinaga v.

Unitd Food & Commercial Workers Int’l Union, 720

F.Supp. 862 (D.Kan.1989) ; Aguinaga v, John Morrell &

Co., 713 F.Supp. 3¢8 (D.Kan.1988); Aguinaga v. John

Morrell & Co., 602 F.Supp. 1270 (D.Kan.1985). Morrell

reached a settlement with the employee class but the

International Union filed cross-claims against Morrell.

Morrell and the employee class entered into a joint defense

agreement whereby Morrell gave the employees access to

seventeen privileged documents for use in their case

against the International Union. Morrell waived its privi-

lege as to four of these documents for use at trial. Five

more of the documents, however, came into the Interna-

tional Union’s possession when the employees’ expert wit-

ness turned over files at his deposition. As a result, the

International Union gained access to the internal memo-

randum in issue here, which is referred to as the Gass

memorandum. The district court ruled that the document

was shielded by attorney-client privilege and the doctrine

of work-product immunity. It held that Morrell’s waiver

of privilege as to the initial four documents did not con-

stitute a waiver as to the remaining documents. There-

fore, the five documents which inadvertently came into

the International Union’s hands, including the Gass memo-

randum, were inadmissible in the Aguinaga case.

The Unions in this appeal sought to introduce the Gass

memorandum into evidence in the district court below

for the purpose of showing Morrell’s belief that the no-

strike clause did not prohibit sympathy strikes. The court

below also held that attorney-client privilege barred ad-

mission of the evidence.

The Aguinaga employees and Morrell shared a joint

defense privilege by virtue of being aligned on the same

side following their settlement and the International

Union’s cross-claims. See Medcom Holding Co. v. Baxter

Travenol Laboratories, 689 F.Supp. 841, 844 (N. D. III.

1988); Western Fuels Ass’n v. Burlington N. R.R., 102

19a

F. R. D. 201, 203 (D.Wyo.1984). “{W]hen information 1s

exchanged between various co-defendants and their attor-

neys|,] ... this exchange is not made for the purpose

of allowing unlimited publication and use, but rather, the

exchange is made for the limited purpose of assisting in

their common cause.” Wilson P. Abraham Constr. Corp.

„. Armco Steel Corp., 559 F.2d 250, 253 (5th Cir.1977)

(per curiam). It is fundamental that “the joint defense

privilege cannot be waived without the consent of all

parties to the defense.” Ohio-Sealy Mattress Mfg. Co. v.

Kaplan, 90 F.R.D, 21, 29 (N. D. III. 1989; see also Western

Fuels Ass'n, 102 F. R. D. at 203.

Thus, neither the Aguinaga employees nor its counsel

could waive the privilege on Morrell’s behalf, and there is

no evidence that Morrell itself waived the privilege. As

the Ayuinaga court held, Morrell’s waiver as to four docu-

ments did not waive its privilege as to the rest. The fact

that the Unions inadvertently gained access to the other

documents does not affect this ruling.

The Unions argue that Morrell waived its privilege

by allowing its general counsel to testify in the Agui-

naga trial concerning one of the four documents which

Morrell had agreed to release. While the Unions cor-

rectly recognize that a waiver of privilege as to one com-

munication may extend to other communications relating

to the same subject matter, United States v. Jones, 696

F.2d 1069, 1072 (4th Cir.1982) (per curiam); United

States v. Cote, 456 F.2d 142, 144-45 (8th Cir.1972), this

argument is unavailing here. The released document

neither involves sympathy strikes nor the _ no-strike

clause. The documents were insufficiently linked for

waiver as to one to constitute waiver as to the other.

II.

The Unions challenge several aspects of the damages

phase of the trial. First, they contend that the district

court should not have excluded either evidence offsetting

20a

damages due to the lower wage rates of the replacement

workers, or evidence of an Occupational Safety and

Health Administration (OSHA) report discussing condi-

tions at the Sioux Falls plant. Second, they argue that

Morrell failed to prove that its damages were contem-

plated by the contract. Finally, they contend that the

damages verdict was speculative. We will consider these

claims of error separately.“

A.

Morrell claimed damages only for its profit lost during

the strike. At trial, the Unions attempted to present evi-

dence that Morrell's losses due to the strike were par-

tially offset by the lower wages Morrell paid replacement

workers after the strike. The district court excluded the

evidence under Federal Rule of Evidence 403.

The Sioux Falls collective bargaining agreement al-

lowed Morrell to pay lower wages to employees who had

worked for Morrell for less than one and one-half years.

Morrell paid the 2,200 replacement workers this lower

‘ate, and the Unions contend that the damage award

should be reduced to reflect the difference between the

cost of paying the old workers and the cost of paying the

replacement workers. This argument is directed solely at

post-strike labor savings. At trial, the Unions were cred-

ited with all strike-related cost savings, including the

lower wage rate paid during the strike, in determining

Morrell's total damages during the strike period. (Tr.

1702-06).

We note initially the well-established principle that a

“trial court's exclusion of evidence under Fed. R. Evid. 402

The Unions assert other prejudicial errors based on the follow-

ing: (1) the court referred to the Unions’ conduct as “illegal:” (2)

Morrell was permitted to show that the Unions intended to injure

the company; (3) the Unions were not permitted to explain that the

contract breach was a sympathy strike; and (4) Morrell was allowed

to present evidence about violence at another striking plant. We

reject these claims, and they do not merit further discussion

22a

ment to a “ballpark” estimate of the effect of the offset

on Morrell’s damages. (Appellee’s Appendix at 149-50,

178, 181-85).

In sum, we are satisfied that the Unions failed, as a

matter of law, to meet their burden on this issue. There-

fore, we hold that the district court did not err by ex-

cluding this evidence.

B.

At trial, the Unions offered into evidence a report by

OSHA investigators concerning conditions at the Sioux

Falls plant. The court excluded the evidence under Fed-

eral Rule of Evidence 403, and the Unions now challenge

this ruling.

According to the Unions, the OSHA report provided

evidence that the plant was violating OSHA require-

ments by assigning too few workers for difficult tasks,

providing inadequate tools o equipment, and operating

conveyor chains at excessive speeds. The Unions argue

that this supports their theory that replacement workers

were unable to achieve the desired performance levels

because of plant conditions, and not as a result of the

strike.

We review the district court’s ruling with substantial

deference, Hawkins, 900 F.2d at 155, and conclude that

there was no error in excluding this evidence. The Un-

ions argue that Morrell’s damages resulting from operat-

ing in violation of law are not recoverable. See Gibbs

„. UMW, 343 F.2d 609, 618 (6th Cir.1965), rev'd on

other grounds, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d

218 (1966). We reject the OSHA report as evidence on

this theory because it contained merely unproven allega-

tions of violations. Furthermore, the Unions failed to es-

tablish the necessary causal link between lost profits and

safety violations. Therefore, we conclude that the court

correctly determined that this evidence was insufficiently

probative to outweigh the potential for prejudice.

23a

C.

The Unions argue that Morrell failed to prove that its

damages claims were contemplated by the parties in their

collective bargaining agreement. They correctly assert

that Morrell’s damages award may consist only of “the

actual loss sustained ... as a direct result of the breach

and which may reasonably be supposed to have been in

the contemplation of the parties as the probable result

of such a breach at the time the agreement was made.“

Eazor Express v. International Bhd. of Teamsters, 520

F.2d 951, 966 (3d Cir.1975), cert. denied, 424 U.S. 935,

96 S.Ct. 1149, 47 L.Ed.2d 342 (1976). We are satis-

fied, however, that Morrell’s damages award meets this

standard.“

The Unions contend that the parties had not contem-

plated damage claims for worker inexperience and in-

efficiency. In support of this, they identify a contractual

provision requiring all workers to become objectively

“qualified” for a job within two weeks. A union official

testified that workers can become “qualified” for any job

in the plant within two weeks. Based upon this, the

Unions claim that Morrell should not be permitted to re-

cover damages resulting from other subjective measures

of replacement worker efficiency.

This argument is patently untenable. The contract

provision to which the Unions refer concerns Morrell’s

ability to transfer employees between departments and

does not support the proposition that a worker can ef-

ficiently perform any job in the plant, including skilled

butchering, within two weeks. It was the jury’s fune-

tion, not this court’s, to weigh the value and credibility

of the union official’s testimony on worker efficiency.

Furthermore, we reject the Unions’ assertion that the

12 Morrell claims that the Unions waived this foreseeability argu-

ment by failing to object at trial to Morrell’s offers of proof on

these damages claims. We need not decide this issue, however,

because we reject the Unions’ argument on other grounds.

24a

contractual provision authorizing lower wages for new

workers was intended by the parties to be a form of

liquidated damages.

We also reject the Unions’ argument that losses suf-

fered by Morrell’s distribution centers, which are ware-

houses selling Morrell products, were unrecoverable. It

was within the contemplation of the parties that a strike

slowing down production at the Sioux Falls plant would

adversely affect distribution centers selling Sioux Falls

products, and thus such losses were properly recoverable.

D.

Finally, the Unions argue that Morrell's damages ver-

dict was the product of guesswork and speculation. They

assert that Morrell’s damages expert did not provide

sufficient guidance to the jury because he testified as to

alternative methods of assessing lost profits without pro-

viding a basis to distinguish among them. We also be-

lieve that this argument lacks merit.

Evidence of damages is sufficient as long as it is “not

wholly speculative,” Pillsbury Co. v. IMlinois Cent. Gulf

R.R., 687 F.2d 241, 246 (8th Cir.1982), and permits the

jury to “approximate damages on the basis of just and

reasonable inferences.” Wagner Elec. Forp. v. Local

1104, Int“ Union of Elec. Workers, 496 F.2d 954, 957

(Sth Cir.1974). Moreover, we may not reverse the dis-

trict gourt’s admission of expert testimony absent “a

clear,and prejudicial abuse of discretion.” Delta Rice

um N. General Foods Corp., 763 F.2d 1001, 1003 (8th

Cir.1985) (quoting SCNO Barge Lines v. Anderson Clay-

ton & Co., 745 2d 1188, 1192 (Sth Cir.1984)).

Lost profits are properly recoverable in actions in

which unions are found to have violated their no-strike

clause. See, e.g., California Trucking Ass’n v. Brother-

hood of Teamsters, 679 F.2d 1275, 1289-90 (9th Cir.

1981), cert. denied, 459 U.S. 970, 103 S.Ct. 299, 74 L.Ed.

2d 281 (1982); lowa Beef Processors, 597 F.2d at 1146.

25a

This court will not review “the merits of various meth-

ods of calculation, so long as the method actually em-

ployed by the district court is designed to yield a reason-

able approximation of damages.” Frito-Lay v. Local

Union No. 137, Int'l Bhd. of Teamsters, 623 F.2d 1354,

1364 (9th Cir.), cert. denied, 449 U.S. 1013, 101 S.Ct.

571, 66 L.Ed.2d 472 (1980). -

Essentially, the expert’s approach involved projecting

the plant’s sales and profits based upon historical data,

determining the extent to which external factors had an

impact on profits, adding strike-related losses such as de-

creased profits at the distribution centers, and deducting

expenses which Morrell saved as a result of the strike.

We believe that this method allowed the jury to ‘“‘approxi-

mate damages on the basis of just and reasonable infer-

ences.” Wagner Elec., 496 F.2d at 957. It was not error

to permit the expert to discuss eight models of damage

calculations with a range of estimates from $20 million

to $31 million. The expert provided sufficient guidance

by explaining the different assumptions upon which each

model was premised.

We also note that the Unions extensively cross-examined

Morrell’s expert and offered their own expert testimony

on the damages issues. We are compelled to conclude

that Morrell’s damages evidence was properly before the

jury and provided it with the guidance necessary to de-

termine damages. See lowa Beef Processors, 597 F.2d at

1146.

KII.

Finally, the Unions argue that the district court erred

in vacating the arbitration award. As we have said, the

parties sought arbitration on the issue of whether the

strikers were entitled to replace the workers hired during

the strike because they were protected by the seniority

provisions of their collective barga‘ning agreement. The

arbitrator issued an award after the liability phase of

the bifurcated trial, but before the damages phase had

26a

concluded. The award sustained the Union’s grievances,

ordered the reinstatement of the strikers, and held that

the sympathy strikers did not violate the no-strike clause

of the collective bargaining agreement.

Despite the earlier jury verdict expressly holding that

the no-strike clause barred sympathy strikes, the arbi-

trator believed that he needed to independently interpret

the clause because the reinstatement issue was funda-

mentally linked to the breach of contract issue. The arbi-

trator applied the doctrine of coterminous interpretation

to hold that the no-strike clause barred only strikes over

arbitrable matters, and therefore, did not prohibit sym-

pathy strikes. Morrell then asked the district court to

set aside the arbitration award, and the court granted

the request. It held that the arbitrator had exceeded the

scope of his authority and, alternatively, that the doctrine

of res judicata bound the arbitrator, Since this issue is a

question of law, we review de novo the district court's

decision to vacate the award. Nordin v. Nutri, System,

S97 F. 2d 339, 344 (8th Cir, 1990). After carefully ex-

amining the record, we are satisfied that the district

court did not err in this regard,

A.

“We begin by recognizing that where parties to a

collective bargaining agreement have provided that an

arbitrator's award shall be final and binding, the award

is generally non-reviewable by a court.” Trailways Lines

„„ Trailways, Inc. Joint Council, 807 F.2d 1416, 1420

‘Sth Cir.1986). “As long as the arbitrator’s award

‘draws its essence from the collective bargaining agree-

ment,’ and is not merely ‘his own brand of industrial

justice,’ the award is legitimate.” United Paperworkers

Int Union u. Misco, 484 US. 29, 36, 108 S.Ct. 364, 370,

98 L.Ed.2d 286 (1987) (quoting United Steelworkers „.

Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80

S.Ct. 1358, 1361, 4 L.Ed.2d 1424 (19601). This defer-

27a

ence means that “as long as the arbitrator is even argu-

ably construing or applying the contract and acting

within the scope of his authority, that a court is con-

vinced he committed serious error does not suffice to

overturn his decision.” Misco, 484 U.S. at 38, 108 S.Ct.

at 371.

While our review of an arbitration award is narrowly

circumscribed, this judicial deference “does not grant

carte blanche approval to any decision an arbitrator

might make.” Piggly Wiggly Operators’ Whse, v. Ti

Wiggly Operators’ Whse. Indep. Truck Drivers Union,

Local No, 1, 611 F.2d 580, 583 (5th Cir.1980). Rather,

where “a court concludes that the arbitrator did not

stay within the bounds of his authority, this principle

of deference inevitably gives away ... to the greater

principle that an award not drawing its essence from

the agreement is not entitled to judicial enforcement.”

Centralab , Local No, 816, Int'l Uniog of Elec. Workers,

827 F.2d 1210, 1217 (Sth Cir.1987). Such an award must

be vacated because “‘arbitration is a matter of contract

and a party cannot be required to submit to arbitration

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

Steelworkers u. Warrior & Gulf Navigation Co., 363 U.S.

574, 582, 80 S.Ct. 1347, 1353, 4 L.Ed.2d 1409 (1960) ;

see also Franklin Elec, Co. „ International Union, UAW,

886 F.2d 188, 190-91 (Sth Cir.1989). While the issue of

whether the arbitrator exceeded his authority is review-

able, we must broadly construe the collective bargaining

agreement and resolve all doubts in favor of the arbi-

trator’s authority. Lackawanna Leather Co, „. United

Food & Commercial Workers Int'l Union, 706 F.2d 228,

230-31 (8th Cir.1983) ‘en bane); see also Pack Concrete

„. Cunningham, 866 F.2d 283. 285 (9th Cir. 1989 ‘hold-

ing that “an arbitrator’s interpretation of the scope of

the issue submitted to him is entitled to the same defer-

ence accorded his interpretation of the collective bargain-

ing agreement”).

28a

The district court thoroughly discussed this issue and

then concluded that the arbitrator was not authorized to

decide whether sympathy strikes were permitted by the

collective bargaining agreement. This led the court to

characterize the arbitrator's decision as “arbitration by

ambush.” It pointed out that it would have been irra-

tional for Morrell to consent to arbitrate the meaning

of the no-strike clause after obtaining a jury verdict in

its favor on this issue: the court found this contention

particularly ineredible in light of the fact that neither

party had submitted evidence to the arbitrator on the

issue. The court also noted that the arbitrator’s own

characterization of the issue did not suggest that the

issue of the legality of the strikes was submitted for

arbitration. After reviewing the record, the arbitration

clause, and the issue submitted for arbitration, we are

similarly persuaded that the arbitrator failed to stay

“within the areas marked out for his consideration.”

United Steelworkers u. Enterprise Wheel & Car Corp.,

zen US. 593, 598, 80 S.Ct. 1358, 1361, 4 L. Ed.2d 1424

(1960).

After the jury verdict on the liability issue, the par-

ties held a preliminary arbitration hearing. There was

evidence that the parties indicated at that time that they

did not want the arbitrator to address the issue of the

legality of sympathy strikes. Each party insisted that

it would prevail in arbitration of the recall issue re-

gardless of the outcome of the appeal of the liability

verdict, the appeal currently before us. The parties dis-

cussed providing the arbitrator with their briefing of the

sympathy strike issue: the evidence suggests, however,

that the parties intended such information to be used only

ws background material for the recall issue. Indeed,

When the parties stated the issues in their opening briefs

for the arbitrater, neither party referred to the issue

of the legality of the strikes. As a result, the arbitrator

framed the issue before him in the terms agreed upon

by the parties: “Do the seniority and discrimination pro-

29a

visions of the parties’ collective bargaining agreement

apply to the recall of those employees who were on a

sympatny strike from May 1 to November 4, 1987?”

This characterization of the issue contains no sugges-

tion that the issue previously decided by the jury, the

meaning of the no-strike clause, was submitted for arbi-

tration. Moreover, neither party offered any evidence

on the issue, although both parties had presented exten-

sive evidence on bargaining history and relevant con-

duct to aid the jury in interpreting the no-strike clause.

As the district court noted, this lack of evidence suggests

that the parties believed that the issue would not be

arbitrated."'

The Unions emphasize that Morrell relied upon a

breach of contract defense in arbitrating the recall issue

and point out that Morrell sought to frame the issue in

the following terms: “Given a strike in violation of the

agreement,” was the company required to reinstate the

strikers? We are not persuaded that this means that

Morrell intended to arbitrate the meaning of the no-

strike clause. Rather, it indicates that Morrell assumed

that the strike was in breach of their agreement and

thus provided a defense to the grievances. That assump-

tion was supported by the jury verdict in the company’s

favor.

The Unions argue that the district court erred in hold-

ing that Morrell's consent was required in order for the

arbitrator to reach the issue of the legality of the

1 This case is distinguishable from Lackawana Leather, 706 F.2d

228, where this court held that the arbitrator had not exceeded the

scope of his authority in deciding an issue on which the parties had

not presented evidence. Id. at 231-32. The fact that the parties had

not offered evidence on the issue has more significance in this case

than in Lackawanna. Here, the prior jury determination of the

issue provides stronger support for the contention that the parties

did not intend to arbitrate the issue and therefore saw no need to

submit evidence on it.

30a

strikes. They urge that since Morrell, in the collective

bargaining agreement, agreed to submit “any dispute

Which may arise between the Company and the Union”

to “final and bind arbitration,” the arbitrator was au-

thorized to resolve the issue of the legality of the strikes.

The Unions seem to contend that the broad arbitration

clause, which Morrell conceded made the legality of the

strikes arbitrable, somehow prohibited Morrell from lim-

iting the issues which the arbitrator may decide.

We reject the argument that the scope of the arbitra-

tor's authority is limited only by the arbitration clause.

It is fundamental that arbitrators derive their authority

to resolve disputes only because the parties have agreed

in advance to submit such grievances to arbitration.

Gateway Coal Co, „. UMW, 414 US. at 374, 94 S.Ct. at

635. The arbitration provision “constitutes merely a

promise to arbitrate.” Pigqgly Wiggly Operators’ Whzse.,

611 F.2d at 583. “Before arbitration can actually pro-

ceed, it is necessary for the parties to supplement the

agreement to arbitrate by defining the issue to be sub-

mitted to the arbitrator and by explicitly giving him au-

thority to act.“ Jd. “[Ojnce the parties have gone be-

yond their promise to arbitrate and have actually sub-

mitted an issue to an arbiter, we must look both to their

contract and to the submission of the issue to the arbi-

trator to determine his authority.” Jd. at 584 emphasis

added). The initial contract to arbitrate may be

modified by the submission agreement or grievance.” Ji.

There are many instances where courts have recognized

that the scope of the arbitrator's authority depends, in

part, upon how the parties have framed the issue to be

arbitrated, See, C4. Synerqy Gas Co. „. Sasso, 853 F.2d

59, 63-64 (2d Cir. 19887 cert denied, 488 U.S. 994, 109

S. Ct. 559, 102 L.Ed.2d 585 (1988) ; Sunshine Mining Co.

„. United Steelworkers, 823 F.2d 1289, 1294 (Mth Cir,

1987); International Chemical Workers Union, Local

No. 566 u. Mobay Chemical Corp., 755 F.2d 1107, 1110

Sla

(4th Cir. 1985; Courier-Citizen ( . „. Boston Electro-

typers Union No. 11, 702 F.2d 273, 281 (Ist Cir. 1983,

Wren u. Sletten Constr. ., 654 F.2d 529, 533 (9th Cir.

1981% see also . Gorman, Basie Tert on Labor Law

Unionization and Collective Rarqaining e (1976). We

believe that this case also illustrates such an instance.

We also note that “the agreement to arbitrate partic-

ular issues need not be express. It may be implied or

established by the conduct of the parties.” Mohay, 755

F.2d at 1110. The conduct of Morrell, described pre-

viously, which indicated that it did not intend to arbi-

trate the issue of the legality of the strikes, provides

further support for our decision. In sum, we are satis-

fied that the arbitrator was not “even arguably .. . act-

ing within the scope of his authority,” Miseo, 484 U.S. at

38, 108 S.Ct. at 371. in interpreting the no-strike clause,

and therefore, the district court did not err in vacating

the award.

B.

Alternatively, the district court held that the arbitra-

tion award must be vacated because, under the doctrine

of res judicata,'' the arbitrator was bound by the jury's

finding that the collective bargaining agreement pro-

hibited sympathy strikes. We recognize, as did the dis-

trict court, that we need not reach this issue unless we

assume that it was properly before the administrator, a

™ Technically, the court's decision was based upen the doctrine

of collateral extoppel, also referred te as kane preclusion. The

Supreme Court has explained that:

Under the doctrine of res judicata, a judyment on the merits

in « prior suit bars a second suit invelving the “ame parties or

their privies based on the «ime cause of action. Under the doe-

trine of collateral estoppel, . © the second action is upen a

different cause of action and the jodement in the prior auit

precludes relitigation of issues actually litigated and necessary

to the outcome of the first action,

Parklane Hosiery Co, e. Shore, (39 US. 422. 326 u. J. 99 S.Ct. 645,

619 n. 5, 58 L.Ed.2d 552 1979

32a

proposition which we have just rejected. We believe,

however, that this alternative basis provides strong sup-

port for the district court’s ruling and that it is appro-

priate that we consider it. The Unions challenge this

reasoning by arguing that: (1) arbitrators are gener-

ally not bound by res judicata principles; and (2) even

if res judicata principles were applicable, the require-

ments for the doctrine are not met here because the arbi-

tration award was issued before the district court en-

tered a final judgment in the case.“ We reject these

arguments and affirm the district court’s vacation of the

arbitration award on this ground also.

Assuming that the requirements of the test for issue

preclusion are satisfied.“ we believe that the arbitrator

was barred from reconsidering the issue decided in the

prior judicial proceeding. There is scant authority deter-

mining the effect of a prior judicial decision on an arbi-

tration proceeding because the issue arises only in rare

situations; several courts, however, have held that issue

and claim preclusion may bar arbitrators. See, ¢.g., Mil-

ler Brewing Co. „. Fort Worth Distrib. Co., 781 F.2d

494, 501 (5th Cir. 1986); Telephone Workers Union of

New Jersey, Local 827 v. New Jersey Bell Tel. Co., 584

F.2d 31, 33-34 (3d Cir.1978); Burmah Oil Tankers v.

Trisun Tankers, 687 F.Supp. 897, 899 (S.D.N.Y.1988) ;

The Unions also argue that Morrell waived its res judicata de-

fense by failing to assert it during arbitration. We are satisfied

that Morrell sufficiently preserved this defense, particularly in light

of the evidence indicating that the parties did not intend or expect

the arbitrator to reconsider the meaning of the no-strike clause.

Issue preclusion bars relitigation of an issue if the same issue

was involved in both actions; the issue was actually litigated in the

first action after a full and fair opportunity for litigation; the issue

was actually decided in the first action on the merits; the disposition

was sufficiently final; and resolution of the issue was necessary in

the first action. See 18 C. Wright, A. Miller & E. Cooper, Federal

Practice and Procedure § 4416, at 137-88 (1981); see also Parklane

Hosiery, 439 U.S. at 326 n. 5, 99 S.Ct. at 649 n. 5. It is only the

finality requirement which is challenged in this appeal.

33a

Hudson-Berlind Corp. v. Local 807, Affiliated with the

Int’l Bhd. of Teamsters, 597 F.Supp. 1282, 1285-86

(E.D.N.Y.1984). Cases which have refused to apply is-

sue preclusion to arbitrators have done so because the

requirements for issue preclusion were not met. See, ¢.9.,

W.R. Grace & Co. v. Local Union No. 759, Int'l Union of

the United Rubber Workers, 461 U.S. 757, 765, 103 S.Ct.

2177, 2183, 76 L.Ed.2d 298 (1983) (refusing to apply

res judicata where arbitrator’s earlier award had ex-

ceeded his authority); McGraw Edison, Wagner Div. v.

Local 1104, Int’! Union of Elec. Workers, 767 F.2d 485,

489 (Sth Cir.1985) (holding that an arbitrator was not

bound by an earlier award involving a different contract

and different union).

We recognize that the arbitrator had the authority to

determine in the first instance whether to give the prior

judicial determination preelusive effect. Trailways

Lines, 807 F.2d at 1425. We must review the arbitra-

tor’s determination of the issue with deference, but we

may vacate the award if his decision on the preclusion

issue reflects his “own brand of industrial justice.”

Misco, 484 U.S. at 36, 108 S.Ct. at 371. In Trailways,

for example, we held that an arbitrator was bound by a

prior award involving “the same company, the same

union, essentially the same issue, and interpretation of

the same contract.” 807 F.2d at 1425. Trailways in-

volved the res judicata effect of a prior arbitration

award upon a later arbitration. The situation before us

presents a stronger case because we are examining the

preclusive effect of a judicial proceeding in the same dis-

pute. We cannot ignore the strong factual identity be-

tween the issue resolved by the jury and the issue ad-

dressed by the arbitrator. The liability trial and the

arbitration proceeding both arose out of the same factual

circumstances and involve the same parties and contract.

If this entire series of disputes were addressed in one

tribunal, there can be no doubt that the jury verdict

would preclude further consideration of the legality of

34a

the sympathy strikes. For the arbitrator to reject the

jury verdict was to disregard the law, see Stroh Con-

tainer Co. v. Delphi Indus. 783 F.2d 743, 750 (8th

Cir.), cert. denied, 476 U.S. 1141, 106 S.Ct. 2249, 90

L.Ed.2d 695 (1986), and to substitute “his own brand of

industrial justice,” Enterprise Wheel & Car Corp., 363

U.S. at 597, 80 S.Ct. at. 1361, for the deliberations and

verdict of the jury. Furthermore, the reasons given by

the arbitrator for disregarding the verdict do not with-

stand scrutiny. He stated, in the arbitration award, that

he was not bound by the jury verdict because he did not

have the benefit of a trial transcript, the jury instruc-

tions, or the evidence justifying submitting the issue to

the jury. Neither the lack of a trial record, nor his role

as an arbitrator, authorized him to sit as an appellate

court and consider anew the rulings of the district court

and the verdict of the jury. Accordingly, we are unper-

suaded by the Unions’ arguments that the arbitrator was

not bound by principles of res judicata.

Furthermore, we reject the Unions’ argument that the

verdict cannot have preclusive effect because the jury's

liability verdict was not immediately appealable since the

damages phase of the trial had not concluded. See 28

U.S.C. 81291 (1988). While this circuit has not

squarely confronted this issue,“ we believe that finality

* The Unions urge that this court resolved this lese in Usited

States v. Arkanses, 791 F.2d 1573 (8th Cir, 1986), by stating that

At be dectrine of ree judicata therefore ix simply inapplicable, for

there has been no cartier final judgment from which the State could

appeal.” Id. at 1576. The court there was addressing the narrow

issue of whether a diemisaal under Rule 34/6) of the Federal Rules

of Civil Procedure should be given preelusive effect. The rule ex-

pressly provides that such dismissals are “subject to revision at any

time before the entry of judgment” and therefore are inherently

tentative. Thus, the court was not faced with the ewe here

whether a jury verdict after a full trial on the merits precluded

reconsideration of the lese, We are satixfied that the language

which the Unions rely upon in United States ©. Arten should

for purpose of appeal under section 129! ix not neces

sarily the finality that is required for issue preclusion

purposes.

The availability of judicial review is merely one factor

ment g (1982). As Judge Friendly has explained,

“*(flinality’ in the context fof issue preclusion! may

mean little more than that the litigation of a particular

F.2d 80, 89 (2d Cir, 1961), cert. demied, 268 US. 986,

82 S.Ct. 601. 7 I. Fa l S24 (1962). “| Wile see no rea-

Brewing Co, v. Jox, Schlitz Co, 605 F.2d 960 (Th Cir

1979). cert. dewied, 444 US. 1102, 100 S.Ct. 1067, 42

Las TRT (1980'. the Seventh Cireuit held that an

to the plaintiffs success om the merits.” d. at 995; se

also O'Reilly v. Malen, TAT F. n S20, S23 (Let Cir 1984)

(per curiam) ; Aiello v. City of Wilmington, 470 F.Supp.

net be read out of the comtest of the be al factual citeumetane we

of that case.

Furthermore, we are enperemacded by the Upiome aryument that

MeCivew Edicom, THT PQd OO, eee foe the eee peopecitine

that arbitraters ore mat beamed by ree eee peineipies Tie

court foumed the deetrime inapplicable there ente "Re ure

award invelved a diferent comtruct and different anmiem 24 at bee

CC

6

414, 418-19 .,. 1979%/ aff'd, G23 F.2d 85 (3d Cir.

Iro, Aclna Cas, & Sure ty Co, „. n & C., 440

F.Supp. 3 J. 299-403 D. New. 1977 /, Authoritative com-

mentaries also provide support for our conclusion. Se

Restatement (Second) of Judgments £13 comment gw

illustration 3 (providing an illustration where a liability

finding in a bifurcated trial would have a preclusive ef-

fect before the damages phase of the trial was com-

pleted); 18 C. Wright, A. Miller & E. Cooper, xupra

+ 4434, at 321 ‘stating that “|rlecent decisions have re-

laxed traditional views of the finality requirement by

applying issue preclusion to matters resolved by pre-

liminary rulings or to determinations of liability that

have not yet been completed by an award of damages or

other relief").

In sum, we are satisfied that the jury's verdict that

the no-strike clause prohibited sympathy strikes was suf-

ficiently final to bind the arbitrator here. Both parties

presented abundant evidence on the issue at trial, and

both had strong incentives to litigate the issue fully.

Furthermore, the jury's verdict addressed the exact is-

sue Which the arbitrator chose to reconsider, Accordingly,

we see “no really good reason for permitting it to be

litigated again.” Lummus, 297 F.2d at 89. Thus, the

arbitrator's decision to ignore this precedent fails to

draw its essence from the contract and was properly

vacated,

IV.

In conclusion, we have carefully considered all of the

Unions’ arguments, and we are convinced that they lack

merit. Accordingly, we affirm the district court's judg-

ment in favor of Morrell and its order vacating the arbi-

tration award,

McMILLAN, Circuit Judge, dissenting.

I respectfully dissent. In my view, the district court

erred as a matter of law in finding that the no-strike

of review by thix court): Swenson v. Baker Industrics,

lar O15 F.2d 479, 483 (Sth Cir. 1980+ the proper con-

struction of a written contract ix a question of law to be

determined by the court +.

The general rules just noted are subject to the one

limitation that has been pressed in the present case, Le.

where a contract is deemed ambiguous, the court may

weigh extrinsic evidence to aide in its construction.

UFCW Local 150, T56 F.2d at 69. The ambiguity excep-

tion, however, is tightly bound. Extrinsic evidence le wot

admissible for the purpose of showing that the parties

intended to make an agreement which is inconsistent

with the unambiguous words of their written contract.

St. Louis Union Trust Co. « United States, 617 F.2d

1293, 1300 (Sth Cir.1980). And a mere difference of

opinion ax to the proper interpretation does not render

the contract ambiguous as a matter of law. Pres Me-

chinery Corp. T27 F.2d at 784. Rather. a contract is

ambiguous only if the court determines that its words

are reasonably sueceptible to more than one construction

by a person acquainted with all operative usages an-

knowing all of the circumstances prior to and contempo-

raneous with the making of the contract. Finally.

whether a contract ix ambiguous is a question of law to

he resolved by the trial court in the first instance and

which is subject to review by the appellate court. Motes

Carriere Council, Ine. „. Locol 600, 486 F. 20 No „

(Sth Cr. ls The trial court's finding of ambiguity ix

nat subject to the clearly erroneous standard of review.

but rather ix reviewed de nove by the appellate court.

Western Contracting Corp. v. Dow Chemical Co. 664

F.2d 1097, 1100 (Sth Cir.1981). Stated in pore con-

tract law terms, then. the threshold question in the pres

ent case is whether the district court correctly concluded

that the no-strike clause n the parties’ collective har-

gaining agreement ix ambiguous and therefore subject

to jury interpretation on the basis of extrinsic evidence.

However, to frame the ixeue solely in these terms ie ·

nores the labor law context in which thl- case arises and

39a

the substantive labor law principles that are therefore

implicated. Morrell brought this suit under 301 of the

Labor-Management Relations Act of 1947 (LMRA), 29

U.S.C. £185 (1988). The Supreme Court's decision in

Textile Workers Union of America v. Lincoln Mills of

Alabama, 353 U.S. 448, 456, 77 S.Ct. 912, 917, 1 L.Ed.2d

Na (1957) (Lincoln Mills), teaches us that in cases

such as this the substantive law to apply is federal law,

which the courts must fashion from the policy of our

national labor laws. Lincoln ils, moreover, provides

concrete guidance as to how such law is to be fashioned:

The Labor-Management Relations Act expressly fu)

nishes some substantive law. It points out what the

parties may or may not do in certain situations.

Other problems will lie in the penumbra of express

statutory mandates. Some will lack express statu-

tery sanctions but will be solved by looking at the

policy of the legislation and fashioning a remedy

that will effectuate that policy.

353 U.S. at 457, 77 S.Ct. at 918.

The LMRA expressly furnishes some substantive law

that is directly relevant to the issues presented in this

case. Specifically, §7 of that Act, 29 U.S.C. £157

(1988). generally protects employees who engage in

sympathy strikes in support of a lawful, primary strike

by another union. See AMCAR Division, ACF Indus-

tries, Inc, © NLRB, 641 F.2d 561, 566 (8th Cir.1981)

(AMCAR Division). That protection, to be sure, is not

absolute; under £9 of the LMRA, 29 U.S.C. 159

(1988). an exelusive bargaining representative can.

through collective bargaining, waive such a right on be-

half of the employees represented by the union. See id.

Nevertheless, the protection of the right to strike has

real substance; the Supreme Court has made it clear that

it is not proper to

infer from a general contractual provision that the

parties intended to waive a [LMRA] statutorily

40a

protected right unless the undertaking is ‘explicitly

stated.” More succinctly, the waiver must be clear

and unmistakable.

Metropolitan Edison Co. +. NLRB, 460 U.S, 694, 708,

103 S.Ct. 1467. 1477, 75 I. Ed. 2d 387 (1983). And, as

this court once stated in a decision which correctly an-

ticipated the holding in Metropolitan Edison,

in the collective bargaining agreement, employees

may waive their right to engage in sympathy strikes,

Where there is not an express waiver of this right,

the evidence of waiver must be clear and unmis-

takable.

AMCAR Division, GAL F.2d at 566 ‘citations omitted).

Thus, general rules governing contract interpretation

and specific statutory rules in the LMRA governing the

right to strike tend to intersect.

In a commercial contract case, a showing by the plain-

tiff that « certain contractual provision may reasonably

be read as prohibiting the defendant from acting as he

did would be sufficient to establish that the contract is

ambiguous, Under Metropolitan Edison, however, that

there exists two plausible interpretations of a no-strike

clause in a collective bargaining agreement, one permit-

ting sympathy strikes and one prohibiting such strikes,

does not establish a legally relevant ambiguity. As a

matter of substantive labor law, a collective bargaining

agreement which can be plausibly read to prohibit sym-

pathy strikes and also plausibly read to permit such strike

does not constitute a waiver of the statutory right to

engage in sympathy strikes. Only an agreement which

clearly and unmistakably waives that statutory right con-

stitutes a legally operative waiver and only such an

agreement can give rise to a breach of contract claim

based on a sympathy strike. Thus, in our case, the thres-

hold question for our review is whether the no-strike

clause can reasonably be read to waive in clear and un-

tla

mistakable terms the right to engage in sympathy strikes.

And that question, like any threshold question of contract

interpretation, is a determination for this court to make

de nove,

In determining whether a contract is ambiguous, and,

hence, whether the contract meaning is to be determined

by the fact-finder on the basis of extrinsic evidence, the

starting point is the language of the contrast. The words

chosen by the parties are to be given their plain and ordi-

nary meaning as understood by reasonable persons ex-

perienced in negotiating the kind of contract in question.

Leman Brow, Kehna Loeb fue. „, Clark Oil & Refining

Corp.,, T39 F.2d 1313, 1317 Mb Cir.1984) ‘citing Uni-

vereal Towing Co. ¢ United Barge Co., S79 F.2d 1098,

1101 (Sth Cir. 19781), cert, denied, 469 U.S, 1158, 105

S.Ct. 906, 83 L.Ed.2d 921 (1985+).

First we note that express no-strike pledges fall into

two general categories: (1) unconditional bans on any

interference with production during the life of the con-

tract; and (2) conditional bans which permit strikes

under certain circumstances. Hasic Patterns: Strikes and

Lockouts, 2 Collective Bargaining Negotiations and Con-

tracts (BNA) Na. 1142, at 77:1 (1987). Over 60° of

all no-strike clauses are of the unconditional type and

ban any, all or every strike during the life of the contract

without qualifications and without reference to the arbi-

tration provision of the contract. Id. The clause being

considered in this case ia not of that type, however, Re-

cause the language is so critical to our analysis, it is

worth repeating here. Article II. Clause 5 provides:

Provisions having been made by this agreement and

local agreements for the peaceful and orderly settle-

ment of any disputes which may arise between com-

pany and the union or local union or any employee

or employees, it is agree’ that during the terms of

this agreement there shall „ no strike, stoppage,

ava. Wr, or men on of wor on *he part of the

122

union or any local union or any union member or

lockout om the part of the company on dernen of

such disputes wutil after the carwest efforts shall be

male te settle all such matters im the manner pro-

vided im the respective amendments.

Ry its own terms, this wist rike provision does not

obligate workers to refrain from % work stoppages

during the life of the contract; rather, it contains a

promise net to strike om account of a specified class of

disputes, disputes for which provisions have been made in

the collective bargaining agreement for peaceful

and orderly settlement.” And even as to those particular

kinds of disputes, the workers are free to strike after

an earnest effort has been made to settle in the manner

provided in the agreement. Thus, the no-strike provision

ix expressly linked to and limited by the obligation to

settle disputes according to the grievance arbitration

clause in the collective bargaining agreement. These

words, if defined according to their plain and ordinary

meaning as that meaning ix understood by experienced,

reasonable, labor bergaining-agreement negotiators, im-

ply cannot be read to outlaw sympathy strikes because 2

sympathy strike, by definition, ix not a strike over a dis-

pute that is subject to peaceful and orderly settlement

under the provisions of the bargaining agreement be-

tween the sympathy strikers and their employer. Ruther.

the dispute underlying the sympathy strike is always be-

tween the employer and a different group of workers and

ordinarily arises out of these workers’ efforts to secure a

new collective bargaining agreement.

Indeed, it is precisely ease a sympathy strike is

undertaken in suppert of a sister union's effort to nego-

tiate with its employer and because neither the causes

ner the issues underiving a sympathy strike are subject

to the settlement procedures provided by the contract

hetween the emplover and the union conducting the sym-

pathy strike that the Supreme Court has held that

sympathy strikes, unlike strikes over arbitrable disputes,

4a

are not subject to federal court injunctions. Buffalo

Forge Co. „. United Steelworkers of America, 428 U.S.

397, 407-08, 96 S.Ct. 3141. 3147-48, 19 L.Ed.2d 1022

(1976); xee Pures Corp. v. Automotive Employeca Union,

Local G18, 705 F.2d 274, 276-77 «sth Cir.1983). For

precisely the sume reason, the words of this limited no-

strike clause expressly linked to the grievance arbitra-

tion procedure cannot be read to even plausibly, let alone

clearly and unmistakably, proscribe sympathy strikes, A

recent decision of the NLRB lends further support. In

Bristol Convalescent Home, luc., the NLRB held that a

no-strike clause which makes specific reference to arbi-

trability

(indicates that the no-strike provision is func-

tionally related to arbitration and intended to be in

effect only when disputes could be resolved by the

arbitration process... . This apparent relationship

between the express no-strike provision and arbi-

tration warrants the inference that the parties in-

tended a narrower limitation on strikes than in cases

involving the express no-strike provision that is

functionally independent from the arbitration process,

ria Convalescent Home, lne., 293 NLRB No. 73, slip

op. ut (April 11, 1980).

Here, the no-strike clause does not contain a promise

that there shall be no strike whatsoever; rather the

clause states only that there shall be no strike on account

of a dispute arising between the company and the union

until after an earnest effort has been made to settle the

disputes in the manner provided in the agreement, Clearly

this promise applies only to strikes over arbitrable dis-

putes between the company and the union. This clause

cannot be fairly read to apply to situations in which

there is no underlying dispute between the company

and the union that is subject to being settled in the

manner provided in the collective bargaining agreement.

Only by distortion of the words in the contract is Morrell

dia

able to even argue, let alone persuade a court, that the

clause can plausibly be read to constitute a clear and

unmistakable waiver of the right to engage in a syMpa-

thy strike.

lowa Beef, relied upon by the majority, is distinct

from the case at hand because it involved a general,

unconditional no-strike clause, rather than a limited no-

strike clause of the type contained in the instant contract.

597 F.2d at 1143-44. In ou Beef, the union argued

that because of the clear and unmistakable waiver rule

and because the union's promise not to strike was given

in return for the employer's promise to arbitrate con-

tractual disputes arising under the agreement, even the

unconditional no-strike clause must be read to be confined

sub silentio to arbitrable disputes. Id. at 1145, Although

this theory has been rejected by some courts, including

tration clause.” Pacemaker Yacht Co. „. NLRB, 663 F.2d

455, 458 (3d Cir. 1981 (Pacemaker\; see United States

Steel Corp. v. NLRB, 711 F.2d 772. 777 7th Cir.1983)

(United States Steh, In Pacemaker, the express no-

strike clause was in no way limited by its terms to arbi-

trate disputes. To the contrary, the agreement included

one no-strike provision which was clearly intended to bar

strikes over arbitrable disputes and another which cov-

ered strikes over all other disputes, Pacemaker, 663 F.2d

at 456-59. Likewise, in United States Steel, the agree-

ment contained a general, unconditional no-strike clause.

711 F.2d at 778. Rejecting an argument that the general

no-strike clause should be limited to strikes over arbitra-

ble disputes, the court nevertheless recognized, “olf

course in cases where an arbitration clause and an ex-

press no-strike clause are closely interwoven, it may be

reasonable to infer that the parties intended the two

15

provisions to have the same scope.” Id. at 777. This is

such a case. Not only is the no-strike clause in this case

“closely interwoven” with the arbitration clause, it also

expressly refers only to strikes over arbitrable disputes

between the company and the union. As such it cannot

reasonably be read as waiving in clear and unmistakable

terms the right to engage in sympathy strikes, which are

by definition, nonarbitrable disputes.

Finally, the court's reliance upon the “struck work”

clause in the Sioux Falls collective bargaining agreement

to negate the plain meaning of the no-strike clause at

issue is misplaced. These two clauses deal with quali-

tatively different labor relation issues and do so in a

way which create no conflict whatsoever, Under the

LMRA, workers who elect to honor a lawful picket line

and do not report to work and do not draw pay are exer-

cising a statutorily protected right. See 29 U.S.C. § 157.

Conversely, employees who elect to report to work and

to draw their pay do not have any statutory right to

refuse to perform struck work, namely, work undertaken

for another employer whose workers are on strike. Thus,

employers have the right to require their employees to

perform such work. See NLRB . Electrical Workers,

346 U.S. 464, 476 n. 12, 74 S.Ct. 172, 178 n. 12. 98 L.Ed.

195 (1953); NLRE . Montqomery Ward & C., Ine. 157

F.2d 486, 496-97 (Sth Cir. 196%; Vie Koenig Chevrolet,

263 NLRB 646, 649-50 (1982).

For the reasons given herein, | would reverse the deci-

sion entered below and direct that judgment be entered

for the unions on Morrell's claim for damages under the

no-strike provision of the collective bargaining agree-

ment. Because that provision does not, as a matter of

law, bar sympathy strikes, | would also reverse the dis-

trict court's decision vacating the arbitration award.

46a

APPENDIX B

UNITED STATES DISTRICT COURT

D SOUTH DAKOTA, W.D.

Civ. Nos, 88-5143, 89-5024

JouNn Morne. & Co., a corporation,

‘ Plaintiff,

LocaL Union 304A or THE UN Foop AN CoMMER-

CIAL Workers, AFL-CIO N CLC; Unrtep Foob AN

COMMERCIAL WorKERS INTERNATIONAL Union, AFL-

CIO AN CLC,

Defendants,

-

UNirep Foop AN COMMERCIAL WORKERS INTERNATIONAL

Union, AFL-CIO & CLC; AN Unirep Foop AN Com-

MERCIAL Workers Loca 304A,

7 Plaintifix,

JoHN Morrecr & Co., a corporation,

Detendaut,

— — =

March 15, 1989

MEMORANDUM OPINION AND ORDER

VACATING ARBITRATOR'S AWARD

BATTEY, District Judge.

NATURE AND PROCEDURAL HISTORY

This matter comes before the Court on John Morrell

& Co.'s (Morrell’s' application to set aside the November

5, 188, award of arbitrator William E. Rent fro. Local

Union 204A of the United Food and Commercial Work-

ers, AFL-CIO and the CLC and United Food and Com-

47a

mercial Workers International Union, AFL-CIO and CLC

Union apply for enforcement of the award. The arbi-

trator found that: “The 1987 sympathy strike was per-

mitted by the clear, unambiguous and express provisions

of this collective bargaining agreement.” On March 10,

1988, more than seven months prior to the arbitrator's

award, a jury empaneled in the Western Division of the

District of South Dakota returned a verdict that the

strikes at issue violated the collective bargaining agree-

ment between the parties and were therefore illegal. The

arbitrator, although possessing knowledge of the district

court action, failed to follow the issues decided in the

liability phase of the trial.“ A separate jury empaneled

in the Western Division of the District of South Dakota

returned a damage verdict on November 10, 1988, in

favor of Morrell in the amount of $24,600,000,

On November 8, 1988, Morrell filed an application and

motion to set aside or stay the November 5, 1988, award

of the arbitrator. The following day, on November 9,

-_— >

The Court, to prevent confusion concerning the verdict, sul,

mitted the following two-part special interrogtaory to the jury:

SPECIAL INTERROGATORY «1

We find that the strike of May 1, 1987, was a (Select one

alternative )

- Sympthy «trike

Primary or economic strike

SPECIAL INTERROGATORY #2

Ix the defendant Local Union S01A prohibited by the terme of

the collective baryaining agreement from enyaging in sympathy

strikes?

The jury found that the May 1987 strike was a «ympathy «trike

‘as did the Eighth Circuit in John Morrell & Co. „„ Local Union

MOLA, % F.2d 457 (8th Cir. 1986)) and further anewered Special

Interrogtacry #2 in the affirmative finding that Union had bar

vained away (waived) ite right to engage in sympathy «trikes (an

issue not previously before the Eighth Circuit).

48a

198%, Union filed a complaint in United States District

Court for the Northern District of Illinois, Eastern Di-

vision, seeking enforcement of the ame award. The Illi-

nois court, on February 10, 1989, transferred the Union's

case to this Court pursuant to 28 U.S.C. § 1404(a). This

Court then, pursuant to Fed.R.Civ.P. 42 a, consolidated

the two cases by order dated March 6, 1989.

The Court has reviewed the extensive briefs in both

cases, Having considered the arguments of the parties,

the Court finds that the award of arbitrator William E.

Rentfro of November 5, 1988, determining that “|t|he

1987 sympathy strike was permitted by the clear, un-

ambiguous and express provisions of this collective bar-

gaining agreement,” must be vacated for the reasons set

forth below.

DISCUSSION

The issue before the Court is whether the parties

agreed to arbitrate the legality of the May 1 to Novem-

ber 4, 1987, sympathy strike. As the United States Su-

preme Court held in United Steelworkers of America v.

Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80

S.Ct. 1347, 1353, 4 L.Ed.2d 1409 (1960), “[Tlhe judi-

cial inquiry under { 301 must be strictly confined to the

quéstion whether the reluctant party did agree to arbi-

trate the grievance or did agree to give the arbitrator

power to make the award he made.”

In AT & T Technologies, Inc. „. Communications

Workers of America, 475 US, 643, 106 S.Ct. 1415, 89

L.Ed.2d 648 (1986), the Supreme Court applied the prin-

ciples necessary to decide this issue as established in the

Steelworkers Trilogy: Steelworkera v. American Mig.

Co., 363 U.S. 564, 80 S.Ct. 1313. 4 L.Ed.2d 1403 (1960) ;

Steelworkera . Warrior & Gulf Navigation Co., 363

U.S. 574, 80 S.Ct. 17, 4 LEd2d 1409 (1960); and

Steelworkers v. Enterprise Wheel & Car Corp., 363 US.

592, 80 S.Ct. 1858, 4 L.Ed.2d 1424 (1960). The Court

concisely stated:

The first principle gleaned from the Trilogy is

that “arbitration is a matter of contract and a party

cannot be required to submit to arbitration any dis-

pute which he has not agreed so to submit.” Werrior

& Gulf, supra, 33 U.S. [574] at 582, 80 S.Ct.

(1347), at 1353 [4 L.Ed.2d 1409 (1960): Americas

Mig. Co., supra, 363 U.S. [564], at 570-571, 80 S.Ct.

(1343), at 1364-1365 [4 L.Ed2d M03 (1960)

(BRENNAN, J. concurring!. This axiom recognizes

the fact that arbitrators derive their authority to re-

solve disputes only because the parties have agreed

in advance to submit such grievances to arbitration.

Gateway Coal Co. r. Mine Workers, 414 US. 268,

374, 91 S.Ct. 629, 635, 38 L.Ed. 2d 583 (1974).

The second rule, which follows inexorably from

the first, is that the question of arbitrability—

whether a collective-bargaining agreement creates a

duty for the parties to arbitrate the particular griev-

ance—is undeniably an issue for judicial determina-

tion. Unless the parties clearly and unmistakably

provide otherwise, the question of whether the pore

ties agree to arbitvate is to be decided by the court,

wot the arbitrator.

(Citations omitted. (Emphasis added.) The Supreme

Court went on te note that: “The willingness of parties

to enter into agreements that provide for arbitration of

specified disputes would be ‘drastically reduced,” however,

if a labor arbitrator had the ‘power to determine hie own

jurisdiction. .. .” Cox, Reflections Upon Labor Arhbitre-

tion, 72 Harv.L. Rev. 1482. 1509 (1959)."

The Eighth Cireuft Court of Appeals in Ceutralah, Tne.

r. Local 816, Elec, et al. Workers, S27 F.2d 1210 «sth

Cir, 1987), applying the principles set forth in AT & T

held that where an arbitrator decided issues not property

before him the district court correctly vacated the award.

In vacating an arbitrator's award for exceeding the scope

of his authority, a district court does not ignore the

— .

50a

strong precedent requiring courts to give great deference

to the arbitrator's remedial powers. The Eighth Circuit

found:

Rather, whereas here, a court concludes that the

arbitrator did not stay within the bounds of his au-

thority, this principle of deference inevitably gives

way, as recognized by the Supreme Court in Enter-

prise Wheel, to the greater principle that an award

not drawing its essence from the agreement is not

entitled to judicial enforcement.

Id. at 1217.

In his November 5, 1988, award, arbitrator Rent fro

found it necessary to determine the legality of the sym-

pathy strike from May 1 to November 4, 1987, as a

threshold issue before addressing the seniority and dis-

crimination provisions of the collective bargaining agree-

ment. In so doing, the arbitrator considered the Eighth

Cireuit decision in John Morrell & Co. v. Local Union

304A, S04 F.2d 457 (Sth Cir. 1986) (Morrell and

the jury verdict rendered in the liability phase of John

Morrell & Co. „. Local Union JOLLA, 541 F.Supp. S03

D. S. D. 1986) (Morrell 11). The result arrived at by the

arbitrator was that the language of the collective bar-

gaining agreement was so clear that any evidence of

waiver by the Union of its right to sympathy strike

“pushes the language of the contract past the breaking

point.” The arbitrator's decision was reached without

the benefit of any parol evidence on the issue of waiver.

The arbitrator stated, “Further, the arbitrator has not

had the benefit of a transcript of the trial, the instruc-

tions of the trial court, or any record evidence which

would give credence to that court’s decision to submit

this issue to a jury.” Thus the arbitrator specifically

failed to abide by the final judgment of the district court

—ia decision which remains final until reversed by ap-

propriate appeal process,

kes before the arbitrator. In Amcor D

thes 8 wor et ö

. . a 9 2 6 1 * 3

AFC I ries, Ini NERB, 641 F.2d 561 (8th (

1 " | j ö f

81 the | th Circuit found that em ees ni

1 ie F ! 1

Live Sir! 9 eT ve in Gim Strike '

erie 4 ' ~~" 9 1 N Fre ni us g 1 l 7

— 91 trike waive} the « jit ‘ a

| ere * number i relevant f Kamm

8 8 n ' 6 : P ot + hg 1 9 mer 9 : 1

rit 1 1 en * 5 mi 9 ry ; We Oo Une

* 1 1 1 1 1 : ' ' : ' '

: . . N

“eS 7 e ry 7 90 : * * hes 1 .

: a

nel : of ‘ 1 * ‘ * 1 rs 7 6 7

ny i the contr '

ov ,

17 1 '

6 T

J

52a

either party submitted such evidence suggests that the

arbitrator was not to decide the issue. The jury em-

paneled in the liability phase (Morrell IT) on the other

hand, received abundant evidence of the parties’ under-

standing of the sympathy strike provisions in their col-

lective bargaining agreement. After hearing the evidence,

the Court instructed the jury in accordance with the law

established by the Eighth Circuit in Ameer. Jury in-

struction #12 stated in part:

However. the right to engage in a sympathy strike

ix a right which can be waived, that is, relinquished

or given up by entering into a collective bargaining

agreement which by its terms waives such right.

Whether the defendant Local 301A waived the right

to engage in sympathy strikes ix for you to decide.

In determining this issue you are entitled to ex-

amine the contract language. the structure of the

contract, the hargaining history and other relevant

evidence which the Court admits for your considera-

tion on the issue of the intent of the parties.

The result was a verdict finding the sympathy strikes to

be illegal under the collective bargaining agreement. Such

finding became the law of the case.

The distinction hetween the ixsue presented in Marre

and Morrell I is clear. In Morrell I the Eighth Cireuit,

reversing the district court's grant of a preliminary in-

junction. found that the Union had participated in 1986

sympathy strikes rather than economic strikes over ar-

bitrable grievances. The court had no need to addres«

the issue of waiver which was the ixeue in Morrell I.

This Court distinguished the two fesues in its order deny-

ing defendants’ motion to reconsider where it held:

In Morrell J. the issue was not whether the Union

had waived ite right to engage in sympathy strikes,

jun rather the issue was whether the Union had in

fact engaged in a sympathy strike which was exempt

53a

from injunction under the Norris-LaGuardia Act, 29

U.S.C. $104. At no time did the district court or the

Eighth Circuit Court of Appeals consider the factors

set forth in Amcar, supra, at 567 and decide whether

the Union waived its right to engage in sympathy

strikes.

In Morrell Il, the jury determined that Union had par-

ticipated im sympathy strikes. The issue for the jury,

then, was whether Union waived its right to sympathy

strikes under Amcar. This Court utilized special inter-

regatories to properly prepare this case for the ultimate

decision of the Eighth Circuit Court of Appeals. This

methodology permits a reversal without the expense of a

costly retrial.

Te allow the arbitrator's award to stand, the Court

contention ix absurd. Just as there comes a time when

“the court should cease listening to testimony that white

is black and that a dollar is fifty cents” (Corbin, The

Parol Evidence Rule, Yale L.J., 603, 623 (19441), a court

must use its “judicial discretion” and “common sense” to

view the realities of litigation, particularly in a case of

such staggering importance.

A review of this file makes it clear that neither party

in this series has left a stone unturned. The litigants

have briefed and argued each and every detail. The sug-

gestion that Morrell agreed to submit the legality of the

sympathy strikes to arbitration after having secured a

rdict flies in the face of common sense.

important in determining whether the parties

Most

agreed to submit the legality of the sympathy strike to

arbitration is the arbitrator's own characterization of the

＋

2

2

5da

issue before him. The arbitrator's award states the issue

as: “Do the seniority and discrimination provisions of

the parties’ collective bargaining agreement apply to the

recall of those employees who were on sympathy strike

from May 1 to November 4, 19877" Even more enlighten-

ing is footnote 2 following the issue statement where the

arbitrator noted Morrell's limited submission. Footnote

2 provides: “UFCW has attempted to subdivide this gen-

eral issue into a series of subissues. Because the company

only stipulated to the general issue, the arbitrator has

retained the more general formulation. Nowhere in the

arbitrator's issue statement does the arbitrator even hint

at the possibility that the legality of the sympathy strike

was submitted for arbitration.

The arbitrator, by deciding the legality of the sympathy

strike, ignored his own characterization of the issue be-

fore him. The arbitrator's failure to request evidence on

the issue of waiver served to reaffirm Morrell’s belief

that the legality of the svmpthy strike was not subject

to arbitration. Morrell’s failure to submit the evidence

already compiled in trial transcripts on the issue of

waiver demonstrates that it did not agree to arbitration

of the sympathy strike issue. To decide an issue of such

magnitude without the consent of Morrell and without

fully developing the record amounts to arbitration by

ambush.

Because this Court has found that the legality of the

sympathy strike was not properly before the arbitrator,

it would not need to reach the res judicata effect of the

jury verdict in Merre!l on the arbitrator's award. The

Court, however, does so in order to provide a complete

resolution of this case. Had the legality of the sympathy

strike been submitted to the arbitrator, he would have

been bound by the decision in Morrell II that the sym-

pathy strike was unlawful. The jury verdict in Morrell

1T was the law of the case and should have been followed

in the arbitrator's award determining the application of

55a

seniority and discrimination provisions of the collective

bargaining agreement.

In Stroh Container Co. v. Delphi Industries, Inc, 783

F.2d 743, 750 (Sth Cir.1986), the Eighth Circuit held

that while an arbitrator's Inte h retation of the law is

insulated from judicial review, an arbitrator's disregard

for the law is not and may open the door for judicial

scrutiny. The court held:

Further, such disregard must “be made clearly to

appear”... and may be found “when arbitrators

understand and correctly state the law, but proceed

to disregard the ame.

Id. The arbitrator in this case clearly delineated the law

to be applied, discussing both the Eighth Circuit's deci-

sion in Morrell I and the jury verdict in Morrell JJ.

The arbitrator then proceeded to disregard the same and

make an independent evaluation. The arbitrator ignored

the Eighth Circuit's decision in Morrell I claiming that,

“nor can the arbitrator be sure the Eighth Circuit will

abide by its prior decision, dicta or not.“ The arbitrator

ignored the jury verdict in Morrell II. stating:

It is true that the district court’s decision is more

directly on point, since it concerns this very strike.

But the Eighth Circuit will almost surely have the

last word. Further, the arbitrator does not have the

benefit of a transcript of the trial, the instructions

of the trial court, or any record evidence which would

give credence to the court's decision to submit this

issue to a jury. Thus, the arbitrator cannot be sure

of the basis for that decision.

It is fundamental law that a jury verdict ie the law of

the case and is final and binding until reversed by an

This Court beliewes that Merril I was properly decided under

the theory of the case presented. It does not comeider the reference

te the contract provision and sympathy strikes dicta.

56a

appellate court. Stoll v. Gottlieb, 305 U.S. 165, 170, 59

S.Ct. 134, 136, 83 L.Ed. 104 (1938. To ignore the law

of the case simply because it has not yet been appealed

ie a manifest disregard of the law. Further, the law

remains the law and the fact that the arbitrator was con-

cerned that this Court may have erred in submitting the

ieeue of waiver to the jury is irrelevant. The Eighth

Cireuit Court of Appeals and not the arbitrator will be

the final authority as to whether this Court erred in its

trial submissions of Morrell II. An arbitrator does not

sit as an appellate court.

Whether the decisions of this Court made in both the

liability and damages phases of Morrell II and its opin-

ion in the present action are sound is a matter for the

Eighth Cireuit Court of Appeals. Morrell II is currently

on appeal to the Eighth Circuit. To ease judicial adminis-

tration, this Court has attempted to place this case in a

posture for appeal so that all issues arising out of these

sympathy strikes may be considered together.

It is therefore the determination of this Court that the

arbitrator exceeded his authority by deciding the legality

of the sympathy strike which was an issue not properly

hefore him and further the doctrine of res judicata pre-

cludes his further inquiry into the issue of the question

as to whether or not sympathy strikes were barred by

the collective bargaining agreement.

In view of the fact that the arbitrator deemed the

legality of the sympathy strike to be a prerequisite to the

subsequent award, the award of November 5, 1988, will

he vacated. Accordingly, it is hereby

ORDERED that the November 5, 1988. arbitration

award of arbitrater William E. Rentfro is hereby vacated.

IT IS FURTHER ORDERED that judgment is to be

entered in favor of John Morrell & Co.

57a

APPENDIX C

UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH DAKOTA

SOUTHERN DIVISION

CIV. 86-4126

86-4135

JoHN Morret & Co., a corporation,

Plaintiff,

vs.

LocaL UNION 304A oF THE UNITED Food AND CoM MER-

CIAL Workers, AFL-CIO anp CLC; UNITED Foob AND

COMMERCIAL WORKERS INTERNATIONAL Union, AFL-

CIO ann CLC,

Defendants.

ORDER

(Filed May 18, 1988

On March 25, 1988, Defendants moved this Court pur-

suant to Rule 50(b) of the Federal Rules of Civil Pro-

cedure for an order granting Defendants’ judgment not-

withstanding the verdict. On May 16, 1988, Plaintiff

filed its responsive pleading.

The record reflects that on March 1, 1988, this Court

empaneled a jury to determine the issue of liability in

this case. The jury reached a verdict for the Plaintiff on

March 14, 1988, finding that the strike of May 1, 1987,

1 Extensions of time were allowed both parties in order that these

post-trial motions be submitted in a timely fashion.

58a

was a sympathy strike and that Defendant Local Union

304A was prohibited by the terms of a collective bar-

gaining agreement from engaging in such sympathy

strikes.

Defendants’ motion for judgment notwithstanding the

verdict is directed solely to the issue of whether the

parties’ labor agreement prohibits sympathy strikes. The

record reflects that Defendants presented this Court with

extensive argument on this issue in the posture of a mo-

tion for directed verdict pursuant to Rule 50% / of the

Federal Rules of Civil Procedure both at the close of

Plaintiff's case and again at the close of all the evidence

presented at trial. No additional grounds are raised by

Defendants’ pending motion for judgment notwithstand-

ing the verdict.

In the alternative, should this Court deny Defendants’

motion for judgment notwithstanding the verdict, De-

fendants request that this Court certify the question pre-

sented for appeal pursuant to 28 U.S.C. § 12921 b).

The propriety of granting a motion for directed ver-

dict or for judgment notwithstanding the verdict is de-

termined by the same standard, both in the trial court

and on appeal. Svoboda v. Bowers Distillery, Inc 745

F.2d 528, 530 (Sth Cir. 1984). Such motions are to

be granted only when the nonmoving party has presented

insufficient evidence to support a jury verdict in his

favor. Id., citing Hauser v. Equifax, 602 F.2d 811, 814

(Sth Cir. 1979). Accordingly, the evidence presented is

viewed in a light most favorable to the nonmoving party

without assessing credibility and the nonmoving party is

entitled to the benefit of all inferences which may be

drawn from the evidence without engaging in specula-

tion. Id.

After having considered Defendants’ motion for judg-

ment notwithstanding the verdict, this Court finds that

the Plaintiff did present sufficient evidence to sustain a

verdict in its favor. Accordingly, the Defendants’ mo-

59a

tion for judgment notwithstanding the verdict will be

denied. In addition, this Court denies Defendant's alter-

native request for certification pursuant to 28 USC.

11292 b as this Court finds (1) that there is no sub-

stantial ground for difference of opinion respecting the

issues raised and (2) that an immediate appeal would

not materially advance the ultimate termination of this

litigation.

Accordingly, it is hereby

ORDERED that Defendants’ motion for judgment not-

withstanding the verdict pursuant to Rule 50% of the

Federal Rules of Civil Procedure is denied.

IT IS FURTHER ORDERED that Defendants’ mo-

tion for certification pursuant to 28 U.S.C. § 1292(b) is

denied.

IT IS FURTHER ORDERED that the trial of the

damages portion of this case shall commence on Tuesday,

November 1, 1988, at 9 a.m., as the Court's =2 case

scheduled for that day.

Dated this 18th day of May, 1988.

By THE CouRT:

Richard H. Battey

RicHArD H. BATTEY

United States District Judge

ATTEST:

WILLIAM F. CLAYTON

Clerk

By Alice R. Raesly

Deputy Clerk

(SEAL)

60a

APPENDIX D

UNITED STATES COURT OF APPEALS

EIGHTH CIRCUIT

No. 86-5364

JOHN MorreLL & COMPANY,

Appellee,

Ve

LocaAL UNION 304A oF THE UNITED Foop AND COMMER-

CIAL Workers, AFL-CIO; UNITED Food AND COMMER-

CIAL WoRKERS INTERNATIONAL UNton, AFL-CIO and

CLC,

Appellants.

DENNIS Foster, individually and in his capacity as presi-

dent of defendant Local 304A; JAMES R. Lyons, indi-

vidually and in his capacity as Business Representative

and Corresponding Secretary of defendant Local 304A;

JOHN Do and OTHER PERSONS UNKNOWN.

Submitted Oct. 17, 1986

Decided Oct. 30, 1986

Before LAY, Chief Judge, and FAGG and BOWMAN,

Circuit Judges.

PER CURIAM.

Local Union 304A of the United Food and Commercial

Workers, AFL-CIO ‘Local 304A) appeals the district

6la

court’s grant of John Morrell & Company's motion for a

preliminary injunction. We reverse.

John Morrell & Co. (Morrell) is a meat processing busi-

ness with facilities in Sioux Falls, South Dakota and

Arkansas City, Kansas Ark City). Local 304A, an

affiliate of the United Food and Commercial Workers

International Union, AFL-CIO and CLC, represents em-

ployees at the Sioux Falls plant and negotiates collective

bargaining agreements with Morrell on behalf of those

employees. Local 340, a different local of the same inter-

national, represents and negotiates with Morrell on behalf

of employees at the Ark City facility. Neither local is a

party to the other local’s contract with Morrell.

When Local 340 contract with Morrell expired on

July 1, 1986, its members struck at the Ark City plant to

exert pressure on Morrell to negotiate a new collective

bargaining agreement. On two separate occasions, Au-

gust 4 and August 15, 1986, members of Local 340 also

set up picket lines at the Sioux Falls facility. Local 340’s

business agent testified on cross-examination at the hear-

ing on the preliminary injunction that Local 340’s expecta-

tion was that if the Sioux Falls employees honored the

picket lines, more pressure would be exerted on Morrell

to negotiate favorably with the Ark City employees. On

both dates, all but one to two percent of the Sioux Falls

employees represented by Local 304A refused to cross

Local 340’s picket lines. While it appears that some

officers of Local 304A spoke with Local 340 picketers, no

evidence in the record indicates that any member of Local

304A carried picket signs or placards or engaged in any

strike activity other than refusing to cross the picket line.

The president of Local 304A testified before the district

court that his intent as a member of Local 304A in refus-

ing to cross Local 340’s picket line was to show support

for Local 340 in its contract negotiations with Morrell,

' The Honorable Fred J. Nichol, United States Senior District

Judge for the District of South Dakota, presiding.

62a

and that there was no underlying dispute between Local

304A and Morrell.

Anticipating that Local 304A might take action in

support of the Ark City employees, Morrell informed

Local 304A by letter on July 30, 1986, that it believed

that the no-strike clause in their collective bargaining

agreement prohibited Local 304A from honoring a picket

line set up in Sioux Falls by Local 340. In that letter,

Morrell stated that any Sioux Falls employees who par-

ticipated in such a strike were subject to termination.

On August 4, 1986, the first date Local 304A members

refused to cross Local 340's picket line, Morrell sought a

temporary restraining order, preliminary injunction, and

permanent injunction. That same day, before the issues

could be addressed by the district court, Local 340 dis-

mantled its picket line and Local 304A made an uncon-

ditional offer to return to work. Although the Sioux

Falls employees did return to work on the evening of

August 4, Morrell took disciplinary action against the

strike participants by noting each employee's absence on

* The no-strike clause reads:

Provisions having been made by this Agreement and local

agreements for the peaceful and orderly settlement of any dis-

putes which may arise between Company and the Union or

local Unions or any Employee or Employees, it ix agreed that

during the term of this Agreement there shall be no «trike,

stoppage, slowdown, or suspension of work on the part of the

union or any local Union or any Union member or lockout on

the part of the Company on account of such disputes until after

an earnest effort shall be made to settle all such matters in the

manner provided in the respective agreements.

Article II £5, Agreement Between John Morrell 4 Co. and Local

304A and the International Union of the United Food and Com-

mercial Workers, Nov. 20, 1985—Nov. 19, 1988.

*Local 204A's unconditional offer to return to work «tated:

“The picket line is coming down. We're making an unconditional

offer to return to work on behalf of the membership of Local 204A,

with the regular shifts, starting with tonight.”

63a

August 4 as “unexcused” in its files. In protest of Mor-

rell's action, Local 304A filed a class grievance.

On August 15, when the members of Local 304A re-

fused to cross a new picket line established by Local 340,

Morrell applied for and obtained a temporary restrain-

ing order. After an evidentiary hearing on August 18,

1986, at which Local 304A moved the district court to

vacate the TRO and deny Morrell further injunctive

relief, the district court grented Morrell a preliminary

injunction which prohibited Local 304A and all persons

acting in concert with its members from participating in

work stoppages at the Sioux Falls plant. The district

court ordered that the issues raised in the court's memo

randum opinion and order be submitted to arbitration.

In its memorandum opinion, the district court found that

the August 4 strike was a sympathy strike which could

not properly be enjoined. However, relying on the fact

that the second work stoppage occurred after the union

had submitted an unconditional offer to return and had

filed the class grievance, it concluded that the August 15

net jon was only in the guise of a sympathy strike and had

been transformed into a dispute over underlying arbitrable

issues. Because it had concluded that the second strike was

over an arbitrable grievance covered by the terms of the

parties’ collective bargaining agreement, the district court

determined that the second strike could be enjoined. After

unsuccessfully seeking a stay from the district court

pending appeal, Local 304A petitioned this court for an

expedited hearing, which we granted.

To determine whether the district court properly en-

joined Local 304A's strike activities, we start with the

congressional limitation on a federal court's jurisdiction

to issue orders enjoining a strike, set out in section 4 of

the Norris-LaGuardia Act, 29 U.S.C. £104." A narrow

= — —

* Section 4 of the Norris-LaGuardia Act provides, in pertinent

part:

No court of the United States «hall have juriediction te lene

any restraining order or temporary of permanent injunction

fda

exception to this statutory prohibition from enjoining

strikes was established by the Supreme Court in Boys

Markets, Ine. „, Retail Clerk’'a Union, 398 U.S, 235, 90

S.Ct. 1583, 26 J. Ed. 2d 199 +1970). which allows an in-

junction to issue only if the strike is over a dispute which

under the parties’ collective bargaining agreement should

be submitted to arbitration. In two subsequent cases, the

Supreme Court emphasized the narrowness of the Bowe

Markets exception and held that a Boys Marketa injune-

tion may not issue unless the strike has been triggered

by an arbitrable dispute. Se Jackaonrille Bulk Termi-

pale, luc. . International Jun An, 457

U.S. 702, 102 S.Ct. 2672, 73 L.Ed.2d 327 (1982), and

Buffalo Forge Co. „. United Steelworkers, 428 U.S. 397,

S.C. 3111. 1 J. Ed.2d 1022 61976) both cited in

Pure Corp. „. Automotive, ete. Employees Union, 705

F.2d 273. 276 Sth Cir.1983) +.

In gauging the Intended scope of the Boye Marketa

exception to the anti-injunction rule, this court has ob-

served that

he Supreme Court's opinions in Buffalo Forge and

Jacksonville Balk Terminals analyze the Boys Markets

exception as a means for effectuating the national

policy favoring agreements to arbitrate, and not as

an enforcement mechanism for no-strike clauses, Both

Buffalo Forde and Jacksonville Bulk Terminala dia-

tinguish between strikes where the underlying dis-

pute is arbitrable and those where the legality of the

strike itself is arbitrable. Only in the form category

are strikes subject to injunction, because only there

in any case invelving or growing out of any labor dispute. to

prohibit any person or persons participating or interested in

such dispute * * * from doing, whether singly or in concert,

any of the following acts:

fa) Ceasing or refusing te perform anv work or to remain

in any relation of employment

29 U.S.C. § 101.

pute between Local 304A and Morrell, and did not find

that members of Local 204A struck at any time other

than the two separate dates that Local 340 pickets ap-

peared in Sioux Falls, the district court concluded ax

a matter of law that local A“ refusal on August 15

to crest Local 10's picket line was precipitated by the

crievanee filed by Local 304A to protest Morrell's disci-

pline of employees who participated in the August 4

strike. The district court concluded that the second strike

therefore fell within the Bows Markets exception and could

be enjoined. For this conclusion, we can find no

in the record, in the district court's findings of fact, or

in the applicable case law.

Neo evidence indicates that Local A was attempting

te clreumvent its contracted-for obligation to process this

dispate through nermal arbitration channels by striking.

To the contrary, the record shows that Local 304A has

sough', net avoided, arbitration of the grievance. Moere-

over, arbitration of the grievance will not resolve what

the district court itself found to underlie Local 304A's

strike actions—the desire to show support for Lo

cal 310. The evidence does indicate that a werk stop-

page oecurred at the Sloux Falls plant on August 15 only

when Local 310 pickets reappeared. The chronology of

events on which the district court relied cannot alone sup-

port an inference that the August 15 strike was over

Morre!l’s disciplinary acts, expecially when the evidence

ut the hearing uniformly supperts a conclusion that the

August 15 strike, lke the August 4 strike, was solely a

sympathy strike in support of Lal 340, Nothing in the

record or in the district court's findings supports an in-

ference of a cate and effect relationship between the

wrievance and the August 15 strike.

Further, the distriet court's reliance on Complete Aute

Treveit, lee. „ Rel GUE Pd 1110 ith Cir 1980), aff'd

on . ovewnds, AST US. 401, 101 S.Ct. 1898, 68 L.Ed od

sis Tost), to conclude that the August 15 werk stoppage

67a

Was transformed into a strike over an arbitrable grievance

is misplaced. In Complete Auto, the evidence in the record

imficated that although the original non-arbitrable event

causing the strike was resolved, the strike continued over

an admittedly arbitrable dispute. /d. at 1111. The Sixth

Cireuit held that in determining the cause of a strike for

purposes of issuing an injunction, a district court should

consider What the strike was “over” at the time of its

decision rather than what “precipitated” the strike in the

first place. Id. at 1114.

Here, the went causing the August 4 sympathy strike,

Local 2340's stalled contract negotiations with Morrell, re-

mained unreselved as of August 15. The fact that Local

WHA filed a grievance indicates that Local 304A was

comsciows'y Invoking arbitration machinery to reso've the

dispute. The Sixth Circuit's reasoning in Complete Auto

does net teoch that whenever a grievance is pending which

arose out of a strike that could not be enjoined, a union

cannet subsequently engage in another protected strike.

We knew of ne court which has relied on . ‘omplete Auto's

“transformation” analysis to find an injunction of a strike

warranted. Nor does any case of which this court is

aware, incheding Complete Auto, hold that because a griev-

ance is pending a subsequent strike ix presumptively under-

taken in rexpemse to the dispute underlying that griev-

ance, Moreover, the Sixth Circuit itself has apparently

questioned the continuing vitality of Complete Auto's

transformation theory. Although Complete Auto was

affirmed om other grounds on appeal, in a subsequent case

discussing the prerequisites to issuance of an injunction

pending arbitration, that court noted that “the Supreme

Court has net addressed the validity of the transforma-

* henry ana! ysis.” 15. ruational Union Uniled Aulomolile,

ete, Workers © Lester Hung C, 718 F.2d 818, 824 n. 1

th Ch deste ‘citing urteile Bulk Terminale, 457

US. at T2t w. 22, 102 S.Ct. at 2685 n. 22). Complete

hee lends me support to the district court's conclusion

68a

that the August 15 strike was not a sympathy strike to

the same extent as was the strike on August 4°

The uncontradicted evidence in the record indicates that

although Local 304A's filed grievance resulted from Mor-

rell’s retaliation for Local 304A's participating in the

August 4 strike, the grievance did not precipitate Local

3044's participation in the August 15 strike. Neither

the record nor the district court's own findings support

the district court's conclusion that the August 15 strike

was not a sympathy strike but had been transformed by

virtue of the filed grievance into a strike over an arbitra-

ble matter. Because there is no evidence in the record to

support the district court's finding that the August 15

strike was over an arbitrable grievance, the strike does

In concluding that the August 15 work stoppage was in the

“guise” of a sympathy strike, the district court emphasized that

Local 304A had made an unconditional offer to return to work which

the district court “accepted.” Citing no authority for ite cnc h-

sions, the district court interpreted the “offer” ax becoming part

of the collective bargaining agreement, presumably concluding that

in making the offer Local 304A waived its right to engage in any

future strike of any kind. We believe that this interpretation of

the events of August, 1986 overlooks the function of unconditional

offers in labor relations as a means to conclude a strike and re-

instate strikers to their original jobs without the union members

being displaced by replacement workers. Ser, e NLRE ©. Fleet-

wooed Trailer Co, 289 US. Na. 380-81, „ S.Ct. 38. 546-47, 19

I. Ed d 614 (1967); CH. Gaenther & Sow, Ine. „ NLER, 427 Fd

O83, O85 (Sth Cir.), cert. dewied, 100 U.S. 942, 91 S.Ct. 240, 27

I. Ed ad 246 (1970). Laidlaw Corp. ©. NLRB, 414 F.2d 99, 108

(7th Cir, 1969), cert. denied, 397 U.S. 920, 90 S.Ct. 928, 25 L. Ka Sd

100 (1970). The right of employees to engage in «ympathy «trikes

in support of another union ix protected under provisions of the

National Labor Relations Act, eee 29 U.S.C. $6 157, 163, although

employees may waive this right if the waiver ix clear and um-

mistakable. Amcor Division, ACF Indus. Ine. « NLER, G41 F 2d

561, 566 (Sth Cir, 1981). However, we do not beliewe that it is

proper to construe this unconditional offer to return to work ax a

new promise, incorporated in the collective bargaining agreement,

in which Local 201A waived ite right to engage in further lawful

strike activity.

UNITED STATES DISTRICT COURT

D. SOUTH DAKOTA, S.D.

No. Civ. 86-4135

Joux MoaxzzL. & Co.

Plaintiff,

V.

Local UNton 304A or THE Uxrrep Foop Ax CoMMER-

CIAL Workers, AFL-CIO n CLC: and UNITED Foop

AND COMMERCIAL WorKERSs INTERNATIONAL UNION,

AFL-CIO G CLC; Dennis Foster, Individually and

in his capacity as president of Defendant Local 304A:

James R. Lyons, Individually and in his capacity as

Business Representative and Corresponding Secretary

MEMORANDUM OPINION

AND ORDER

NICHOL, Senior District Judge.

71a

and Commereial Workers Union (UFCW), AFL-CIO

(Local 304A), and UFCW International Union, AFL-

CIO, (International), are unincorporated associations and

labor organizations within the meaning of the NLRA

Section 2(5), 29 U.S.C. section 152(5). Morrell and

Local 304A and the International are parties to a col-

lective bargaining agreement with a term from Novem-

ber 20, 1985 through November 19, 1988. The plaintiff

brought this action pursuant to section 301 of the Labor-

Management Relations Act, 29 U.S.C. section 185, seek-

ing preliminary injunctive relief against further work

stoppages by the defendants in violation of this collective

bargaining agreement. For the reasons hereinafter

stated, the plaintiff's motion for a preliminary injunction

is granted conditioned upon the employer submitting both

grievances to arbitration. Boys Markets, Inc. „. Retail

Clerk's Union, Local 770, 398 US. 235, 254, 90 S.Ct.

1583, 1594, 26 L.Ed.2d 199 (1970).

FACTS

The collective bargaining agreement between Morrell

and Local 304A and the International contains the fol-

lowing no-strike clause:

5. Provisions having been made by this Agreement

and local agreements for the peaceful and orderly

settlement of any disputes which may arise between

Company and the Union or local Unions or any Em-

ployee or Employees, it is agreed that during the

term of this Agreement there shall be no strike,

stoppage, slowdown, or suspension of work on the

part of the union or any local Union member or

lockout on the part of the Company on account of

such disputes until after an earnest effort shall be

made to settle all such matters in the manner pro-

vided in the respective agreements.

Mandatory grievance and arbitration provisions are also

contained in the agreement and are all specifically re-

ferred to in this no-stike clause (“the manner provided

in the respective agreements”).

72a

Morrell’s also has a meat processing facility located in

Arkansas City, Kansas (Ark City). This facility's bar-

gaining representative with Morrell is Local 340 of the

UFCW, along with International. Any collective bar-

gaining agreement between Morrell and the Ark City

facility is separate and distinct from that between Mor-

rell and Local 304A in Sioux Falls. The labor contract

at the Ark City plant expired July 1, 1986, and when

negotiations were unsuccessful between Local 340 and

Morrell, Local 340 went out on strike. The legality of

this strike is not at issue here.

On August 4, 1986, a number of the members of Local

340 set up a picket line in front of the Sioux Falls Mor-

rell plant. With insignificant exception, Local 304A and

the employees at the Sioux Falls plant whom Local 304A

represent honored this picket line. At this time, Local

304A, as testified to by its president Dennis Foster, had

no grievance with the plaintiff. The picket line was

honored to show support for Local 340 workers.

Morrell immediately sought a temporary restraining

order and injunctive relief to end this work stoppage.

Before any court addressed this issue, however, Local

304A, by and through its business representative Jim

Lyons, made an unconditional offer to return to work.

On August 8, 1986, Local 304A filed a grievance pur-

suant to the collective bargaining agreement, claiming

a violation of Article II. Section 5, the no-strike pro-

vision, of the agreement. The union claimed that the

contractual agreement permitted Local 304A members to

honor picket lines without being eubject to discipline or

discharge. This grievance was filed in response to action

taken by Morrell against employees who had refused to

cross the picket line; the employees’ personnel records

were noted with an unexcused absence from work on that

date.

Despite the unconditional offer to return te work and

with the grievance pending, the workers again refused

73a

to cross a second picket line established at the Sioux

Falls plant by Local 340 on August 15, 1986. When thie

second work stoppage occurred, Morrell sought and ob-

tained a Temporary Restraining Order (TRO), issued

August 15, 1986, restraining the members of Local 304A

from further work stoppages. Local 304A, by and

through its president Dennis Foster, again, on August

15, 1986, made an unconditional offer to return to work.

ISSUE

The issue presented to the court was whether injunc-

tive relief could be granted pending arbitration of the

dispute between Morrell and Local 304A and the Inter-

national under Boys Markets, luc. v. Retail Clerk’s Local

770, 308 U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970).

In Boys Markets, the Supreme Court determined that

an exception to the general anti-injunction rule of the

Norris-LaGuardia Act, 29 U.S.C. section 104, is that an

injunction could be granted where an employer sought

to enforce the union's contractual obligation to arbitrate

grievances rather than strike over them. Boys Markets,

398 U.S. at 249-253, 90 S.Ct. at 1591-1594. This narrow

exception was further clarified in Buffalo Forge Co. v.

United Steelworkers of America, 428 U.S. 397, 96 S.Ct.

3141, 49 L.Ed.2d 1022 (1976). In Buffalo Forge, the

Court held that the Boys Markets exception does not

apply when “only the question whether the strike violates

the no-strike pledge, and not the dispute that precipitated

the strike, is arbitrable under the parties collective bar-

gaining agreement” Jacksonville Bulk Terminals, Ine. v.

International Longshovemen's Ass'n, 457 U.S. 702, 708-

709. 102 S.Ct. 2672, 2678, 73 L.Ed.2d 327 (1982).

Ruffalo Forge at first blush would appear to be dis-

positive of the issue before this Court. The factual situa-

tion addressed in Buflalo Forge was a pure sympathy

strike, wherein members of one union with no dispute

with their employer, honored the picket line of a separate

74u

bargaining unit who in fact had a dispute with the same

employer. Buffalo Forge, 398 U.S. at 399-404. 96 S.Ct.

at 3143-3146, Since there was in fact no dispute between

the union honoring the picket line and the employer, the

“vmputhy strike was not over an arbitrable grievance

and thus not subject to the Boys Markets exception. Id.

at 404, 96 S.Ct. at 3146. The Court did not disagree that

the issue of whether the sympathy strike violated the no-

strike provision of the collective bargaining agreement

was itself arbitrable. Id. at 405, 410, 96 S.Ct. at 3146,

3149. However, since there was no underlying dispute

hetween the union and emplover, no injunctive relief

pending arbitration was justified, thus Boys Markets did

net control the case. Id. at 407, 96 S.Ct. at 3147.

This reasoning of Bufialo Forqe was reaffirmed in the

subsequent case of Jackeonvitle Bulk Terminals, Ine. „.

International Lovashoremen's nn, 457 U.S. 702, 102

S.Ct. 2672, 73 L.Ed.2d 327 (1982). The dispute at issue

in Jacksonville was whether the refusal by the union, in

protest of the Soviet invasion of Afghanistan, to handle

cargo hound to or coming from the Soviet Union violated

the collective bargaining agreement between the parties,

The employer sought injunctive relief pending arbitration

of this dispute.

Both Buffalo Forge and Jacksonville addressed a work

stoppage that occurred, not in response to any specific

dispute between the union and the employer, but rather,

was in response to some other distinct controversy, i. .,

another union’s strike and the Soviet invasion of Af-

ghanistan. This is similar to what occurred on August 4,

1986, in the case at bar. Local 304A, at that time. had

no separate arbitrable dispute with the plaintiff. Local

304A simply honored the picket line established by Local

440 and thus squarely came within the Ry falo Forge

rationale. Injunctive relief at that point would have heen

improper.

However, the union unconditionally agreed to return to

work before the Court could even address the question of

Tha

injunctive relief. This unconditional offer was accepted

by the company and became a part of the ongoing collec-

tive bargaining agreement. Local 304A, four days later,

filed a grievance against Morrell charging that the em-

ployer’s action in disciplining employees who failed to

work on the day of the sympathy strike violated the no-

strike provision of the collective bargaining agreement.

The union, I ling this grievance, has recognized the

arbitrability of this dispute between itself and the plain-

tiff. Yet one week later, on August 15, Local 304A again

participated in a work stoppage under the guise of a

“sympathy strike” for Local 340.

It is this subsequent work stoppage, after an uncon-

ditional offer to return to work following a grievance

submitted by the Union, that distinguishes this case from

both Buffalo Forge and Jecksonville. The original work

stoppage, which began as a sympathy strike over a non-

arbitrable dispute, has now been transformed into a dis-

pute over an arbitrable issue, i. e., the right under the

collective bargaining agreement to discipline these work-

ers. The Sixth Circuit has in fact addressed this “trans-

formation” concept in Compete Auto Transit, Inc. v. Reis,

614 F.2d 1110 (6th Cir.1980), e on other grounds,

451 U.S. 401, 101 S.Ct. 1836, 68 L.Ed.2d 248 (1981).

The Supreme Court, however, has not addressed the valid-

ity of this transformation analysis. Jacksonville Bulk

Terminals, 457 U.S. at 723 n. 22, 102 S.Ct. at 2686 n. 22,

citing Compete Auto Transit, 451 U.S. at 401 n. 4, 101

S.Ct. at 1839 n. 4.

In Compete Auto there was a work stoppage based

upon an intra-union dispute. This stoppage was not en-

joinable under Buffalo Forge because there was no under-

lying arbitrable dispute between the employer and union,

After the intra-union dispute was settled, the work stop-

page continued when a question arose over the amnesty

the workers were to be given by the employer. This ques-

tion of discipline was a dispute between the employer

1 ˙²T een

76a

and union and was over the terms of employment and

thus arbitrable under the collective hurgaining agreement,

The Sixth Circuit noted that the focus in determining the

propriety of injunctive relief should be on what the strike

was over at the time of the decision, not what precipi

tated it in the first place. Complete Auto, 614 F.2d at

1110, 1114. This Court agrees.

The situation at bar, as supported by evidence, is such

that the second work stoppage occurred after a griev-

ance had been filed concerning the discipline of workers

and after an unconditional offer to return to work has

been accepted by the employer. Any subsequent stoppage,

even if under the guise of sympathy strike, was trans-

formed into a dispute over these underlying arbitrable

issues and is enjoinable under the Boys Markets excep-

tion.“ And further, resolution of the discipline grievance

pending before the arbitrator will in fact resolve both

the issue of the validity of a sympathy strike under the

terms of the collective bargaining agreement as well as

the discipline issue.

In addition to finding that an underlying dispute is

arbitrable under the terms of the collective bargaining

agreement, the court must also consider whether the or-

dinary principles of equity warrant the issuance of in-

junctive relief. Boys Markets, 398 U.S. at 254, 90 S.Ct.

at 1594. In order to determine the equity of such re-

lief, the court must consider: (1) the threat of irrepar-

able harm to the movant; (2) the state of balance bes

tween this harm and the injury that granting the in-

junction will inflict; (3) the probability of the movant's

success on the merits; and (4) the public interest. Daeta-

' This Court is not unmindful of the Kichth Cireuit decision of

Valmae Induatrica, Ine. r. Food Handlers Local $25, 519 F.2d 262

(Sth Cir, 1975), cert. granted, vacated and remanded, 428 US. 906,

96 S.Ct, 3215, 49 L.Ed.2d 121% (1976), but feels that the facta in

the case at bar are distinguishable from Velmer and are mech more

in line with Complete Auto, and accordingly holds with the Sixth

Circuit.

a

phase Systems, Ine. v. C. I. Systems, Tuc, (40 F.2d 109,

113 (Sth Cir.1981) en bane).

Testimony was presented to the court as to beth the

competitive nature of the meat processing industry and

the fungible nature of the industry's product. When or

ders are unable to be filled customers in a competit \

market are forced to go elsewhere. Often is con re

sult in a permanent loss of this customer, expecially when

the inability to fill orders is repetitive and spore’ «

Suppliers are also affected when the company ix unah+

to accept delivery and keep its commitment as to the

number of animals needed. All of these, customer lem

perishable nature of the product, and lew of supp! er

risks irreparable harm to the goodwill of the compan)

See, Ferry-Morse Seed Cu. v. Food Corn, Ine. Tan Fa

589, 592 (Sth Cir.1983).

The balance of harm in the case at bar falle on the

side of Morrell. As noted above, the potential eee of

goodwill, customers, suppliers, ete.. is great. Local 344

and the International have not demonstrated what harm.

if any, would result to the union if an injunction, com

ditioned on submission of the issues to arbitration

granted. Such an injunction may, in effect. protect the

job security of the defendant union members.

There is a broad no-strike provision contained in 1!

current collective bargaining agreement between the par

ties. There was also evidence as to certain provis on

that Local 304A and the International submitted dur:

the negotiations of the present agreement. Thee pro

posed provisions specifically allowed the members of L

ca! 304A to honor picket lines established at the tene

facility without discipline or discharge. This prow <i!

was not incorporated into the collective bargain ne og

ment signed by beth parties. Such evidence suppor

probability of success on the merits for More! on be

the issue of discipline and the legality of a symp

strike.

78

Lastly, the Court in Boys Markets found in favor of

allowing injunctive relief when the underlying dispute

Was present in order to further the congressional policy

of favoring peaceful resolution of labor disputes. Boys

Markets, 398 U.S. at 258, 90 S.Ct. at 1592. Undoubtedly

peaceful resolution of the dispute in question is in the

public interest.

Having found that, at the time of this decision, there

is in fact an arbitrable dispute between Local 304A and

Morrell which precipitated a second work stoppage on

August 15, 1986, even though under the guise of another

sympathy strike, and finding that the principles of

equity favor the granting of injunctive relief,

THEREFORE, IT IS ORDERED:

That the plaintiffs motion for a preliminary injune-

tion is granted, conditioned upon the employer (Morrell)

submitting to arbitration. This Memorandum Opinion

constitutes the Court's Findings of Fact and Conclusions

of Law pursuant to F. R. C. . 52.

I

NITED S

POR

N 91088

10 Mok vf

1 of 1 | :

Wokkt AFL-CIO: Unit

WORKERS INTERNA? II. I

DENNIS Foster, In Hun f

dent of defendant | i OA: JAM

ually and in his cap “us

ut ti esp ny se i

„ JOHN D | OTHER |

CAL UN]

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CGN “fA

ClOand CL

APPENDIX F

Ars COURT Of

rik EIGHTH Clik

Vr

CTT

ALS

Order Denying Petition for Rehearing and

Suggestion for Rehearing En banc

Appellant's suggestion for rehearing en banc has been

considered by the court and is denied by reason of the

lack of a majority of the active judges voting to rehear-

ing the case en banc. Judge MecMillian would have

granted the petition.

Petition for rehearing by the panel is also denied.

= December 6, 1990

U.S. Court of Appeals

Eighth Circuit

ORDER ENTERED AT THE DIRECTION oF THE CouRT

Sla

APPENDIX G

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 89-5109

JOHN Morrevct & Company,

8 Appellee,

Loca UN N 304A or THE UNITED Foop anp ComMMER-

Cat. Workers, AFL-CIO; Unirep Foop anp CoMMER-

CIAL. WoRKERS INTERNATIONAL UNion, AFL-CIO and

CLC; Dexnis Foster, Individually and in his capacity

as president of defendant Local 304A; James R. Lyons,

Individually and in his capacity as Business Represent-

ative and Corresponding Secretary of defendant Local

SHA; Joun Dor and OTHER Persons UNKNowN,

Appellants.

No. 89-5152

JouN MokkEAI. & Couraxx, a corporation,

* Appellee,

Local UN N 304A or THE UNITED Foop AND CoMMER-

CIAL, Workers, ArL-CIO and CLC; Unrrep Foop and

COMMERCIAL WORKERS INTERNATIONAL UNIon, AFL-

CIO and CLC,

Appellants.

Appeals from the United States District Court

for the District of South Dakota

82a

JUDGMENT

These appeals from the United States District Court

were submitted on the record of the district court, briefs

of the parties and were argued by counsel.

After consideration, it is ordered and adjudged that the

judgment of the district court in this cause is affirmed in

accordance with the opinion of this Court.

September 7, 1990

A true copy.

Attest: s Robert D. St. Vrain

Clerk

U.S. Court of Appeals

Eighth Circuit

MANDATE ISSUED: 12 17 90

dna

APPENDIX N

AWARD OF THE ARBITRATOR

November 5, 1988

Grievance No, 218-87

IN THE MATTER OF AN ARBITRATION

Between

JOHN MorkeELL & COMPANY

And

UNITED F & COMMERCIAL WORKERS INTERNATIONAL

UN and UFCW Loca. 304A

This matter came on for hearing in Sioux Falls, South

Dakota, on August 25, 1988, before Arbitrator William

E. Rentfro, Professor of Law, University of Colorado

School of Law, selected by the parties to hear and render

a final decision on the issue in dispute.

The United Food & Commercial Workers and UFCW

Local 304A, hereinafter “Union” or “UFCW,” was repre-

sented by Richard Roesel, Assistant General Counsel,

United Food & Commercial Workers International Union,

Washington, D.C., and John Morrell & Company, herein-

after “Company” or “Morrell,” was represented by Brad-

ley R. Johnson and David J. Linesch of the law firm of

Haynsworth, Baldwin, Miles, Johnson & Breckenridge,

Tampa, Florida. After extended discussion by counsel it

was mutually agreed by the parties to bifurcate the case.

They stipulated to a preliminary issue; that issue was

submitted on briefs and reply briefs, together with prof-

Sa

fered exhibits and summaries in the nature of each

party's offer of proof. Briefing was completed on or

about October 3, 1988,

BACKGROUND OF THE CASE

In 1986, the Morrell contract with a UFCW local at

Arkansas City, Kansas, expired, and the workers at that

plant went on strike. During that strike picket lines

were twice set up at the Morrell plant at Sioux Falls,

South Dakota. On both occasions the workers at Sioux

Falls, represented by Local SOMA, refused to cross the

picket line. Morrell sought and obtained an injunction

against the second of these *ympathy strikes. This in-

junction was vacated by the Eighth Circuit Court of

Appeals. John Morrell & Co. v. Local Union No. 305A,

S04 F.2d 457 (8th Cir. 1986). In the course of its deci-

sion, that court commented, “[tlo the extent that the

district court found that . the parties’ no strike clause

did not prohibit sympathy strikes . we agree.” 804

F.2d at 460. In both cases, Morrell accepted the return

of all the workers without taking any adverse actions

against them.

In February, 1988, Morrell’s contract with UFCW and

its Local 1142, covering a plant at Sioux City, Iowa, ex-

pired. In March, Local 1142 went on strike. The parties

disagree over whether this was an economic strike or an

unfair labor practice strike, and NLRB proceedings on

that issue are ongoing. From May 1, 1987, to November

4, 1987, Local 1142 maintained a picket line at Morrell’s

plant in Sioux Falls, South Dakota. Most of Sioux Falls’

approximately 2,400 workers honored the picket line.

During the period of this sympathy strike, Morrell

hired replacement workers. The replacements signed a

form which states:

I, the undersigned, acknowledge and agree that if

my employment application is accepted by John

Morrell & Co., Sioux Falls, I will become a regular

full-time permanent replacement employee of the

85a

Company with an initial probationary period. My

continued employment is subject to bargaining obli-

gations with the union, or a final order by or settle-

ment with the NLRB. My continued employment is

also subject to satisfactory work performance and

attendance and compliance with all Company rules

and regulations, as well as normal business conditions

relating to the availability of work.

Union Exhibit B

According to the Union, Morrell actively hired replace-

ments up to November 4, 1987, and was then advertising

to hire further replacements. When the sympathy strike

ended with an unconditional offer to return to work on

November 4, however, Morrell abruptly stopped hiring.

Despite the termination of 286 replacement employees

between November 4 and December 31, 1987, Morrell did

not take back any of the sympathy strikers until January,

1988. Indeed, Morrell advertised on November 3, 1987,

that it would resume a lamb slaughtering operation and

employ 70 new workers. After the offer of unconditional

return to work, the operation was not resumed.

Since January, 1988, Morrell has effectively treated the

strikers as entitled to recall based on seniority whenever

vacancies arise. However, the Union contends (with

proffered evidence that the rate of recall has been ex-

tremely, and suspiciously, slow. Indeed, according to the

Union’s submission, the rate of recall is well below the

rate of quits, retirements, resignations and discharges

and the workforce has steadily shrunk.

The “probationary period” is apparently the thirty day period

provided for in the collective bargaining agreement between the

Company and Local 304A, which states: “new hired Employees

will be required to serve a probationary period of thirty (30)...

days, during which period such Employees shall be considered

temporary and may be dismissed without reference to seniority, for

unsatisfactory work or attendance.” Agreement, Paragraph 40.2(d).

86a

The Union also alleges that in May, 1988, Morrell

shut down its night shift pork division. This affected

250 employees—most of them replacements or crossovers.

While many of these employees were transferred to the

day shift, 119 were given what amounted to new posi-

tions.

As of the date of the hearing in this matter, 408

sympathy strikers had been recalled. According to UFCW

many of those recalled returned to jobs which they had

not 22 previously performed, were not allowed to tid

based on seniority for jobs they had previously performed,

and some of these individuals were subsequently “dis-

qualified” by Morrell for unsatisfactory performance.

Following the strike, Morrell filed a complaint for

damages against the UFCW, alleging that the sympathy

strike violated the no strike clause of the contract. The

federal district court submitted this issue to a jury, which

returned a verdict against the Union. A separate trial

for damages was scheduled to begin November 1, 1988,

and the liability verdict has not yet been reduced to a

final, appealable, judgment.

ISSUE

As noted in the introduction, the parties agreed to

hifureate this arbitration and, at this stage, have jointly

submitted the following issue to the Arbitrator:

Do the seniority and discrimination provisions of the

parties’ collective bargaining agreement apply to the

recall of those employees who were on a sympathy st rike

from May 1 to November 4, 19872

2UFCW has attempted to subdivide this general issue into u

series of subixsues. Because the Company only stipulated to the

yeneral issue, the Arbitrator has retained the more general formu-

lation.

87a

RELEVANT CONTRACT PROVISIONS

II

PURPOSE OF AGREEMENT

5. Provisions having made by this Agreement and

local agreements for the peaceful and orderly settle-

ment of any dispute which may arina between the

Company and the Union or local Un ons. . it is

agreed that during the term of this Agreement there

shall be no strike, stoppage, slowdown, or suspension

of work on the part of the union or any local Union

on account of such disputes until after an earn-

est effort shall be made to settle all such matters in

the manner provided in the respective agreements.

VI

POLICY

12. The Company agrees thai, in accordance with

applicable laws, it will not discriminate against any

Employee or applicant because of . . . membership

in the Union.

>. * * *

Seniority

* * * *

10.2 ( Plant seniority: Plant seniority shall pre-

vail for all plant purposes; including plant layoffs

and recall; department selection at the weekly bump

session; and job bidding from the plant master post-

ing board. ...

POSITIONS OF THE PARTIES

1. Union's Position

The UFCW contends, first, that unjustified refusal to

reinstate employees after a strike is“ ‘discrimination

&8a

ayainst employees by virtue of union affiliation.’ ” It con-

tends that when the clause in this contract states that

Morrell will not discriminate “in accordance with appli-

cable law,” it forbids any discrimination which would be

improper under federal law. Generally, if a strike is

properly characterized as an economic strike, the strikers

are entitled to reinstatment as vacancies become avail-

able. They are not, however, entitled to displace per-

manent replacement hired during the strike. Thus, as

replacement workers depart, strikers, not other replace-

ments or hires, must be recalled. If, however, this was an

unfair labor practice strike, the strikers would be en-

titled to displace even permanent replacements.

The Union argues that Morrell's conduct after No-

vember 4, 1987, plainly violated the strikers’ rights. Its

artificial ceasing to fill vacancies starting the very day

the strike ended was “a blatant act of discrimination.”

Further, the replacement employees hired between Oc-

tober 4 and November 4 were still probationary and, by

definition, temporary not permanent. In refusing to dis-

place these plainly temporary replacements with per—

manent employee strikers, Morrell further discriminated

in violation of the contract. Indeed, UFCW contends that

the “acknowledgment” signed by replacements allowed

them to be dismissed at the will of Morrell and made

all the replacements temporary, not permanent.

The failure to resume the announced lamb slaughter

operation, the ability te find over 100 new positions for

replacement workers when Morrell had only offered jobs

to a “handful” of strikers, and the extremely slow rate

of recall all evidence Morrell’s improper discriminatory

purpose.

The Union contends further that the seniority pro-

visions of this contract govern the right to recall from

a strike. It cites Tarcon, Inc., 64 LA 955 (Williams

1975), which concerned a mid-term strike which was per-

mitted under the collective bargaining agreement. There,

Son

the Arbitrator stated that “the parties have an existing

labor Agreement applicable to the reinstatement of eco-

nomic strikers.” 64 LA at 957. Because the contract

contained a broad seniority provision, Arbitrator Wil-

liams further held that economic strikers could displace

permanent replacements, based on seniority. Here, the

contract provides that plant seniority “shall prevail for

all plant purposes.” Plainly, this includes return from

a strike which is, as in Tarcon, allowed under the con-

tract. See also Dynamic Manufacturers, Inc., 36 LA 635

(Crane 1960).

The Union, naturally, relies upon and agrees with the

HEighth Circuit that sympathy strikes are permitted un-

der this contract. It points out that both the NLRB rul-

ing that this was an economic strike and district court

decision that the strike was forbidden are subject to fur-

ther appeal. Further, the NLRB’s refusal to issue a

complaint is not binding on the Arbitrator. Dan's Mar-

ket, Inc., 72 LA 706 (Harter 1979). The Union requests

that the Arbitrator find that the contract applies, and

schedule a hearing to determine if the contract’s pro-

visions have been violated.

2. Company's Position

The Company aptly states its position as follows:

The Company’s Position is that the articles cited by

the Union do not apply to the recall from any strike,

and especially the recall from a breach of contract

strike. Instead, these provisions cited by the Union

simply indicate how seniority shall apply for the

purposes of the ordinary day-to-day functioning of

the plant and evince a common agreement by an

Employer not to discriminate against persons on the

grounds of inter alia race, sex, color or union mem-

bership.

Morrell goes on to point out that an NLRB ruling,

albeit under appeal, characterized the primary strike as

On

an economic strike. Furthermore, the federal district

court has found that the sympathy strike was n breach

of contract. And while the Kighth Circuit stated that

sympathy strikes were allowed under this contract, that

Was mere dictum.

Morrell reasons that at most these strikers have the

rights of economic strikers. Thus, they are only en-

titled to be reealled to vaeancies and cannot displace

“permanent” replacement workers. To read the cont ret

te require more would undermine the statutory policy of

allowing Morrell to hire ‘permanent’ replacements. Mor

rell cites several arbitration awards which have refused

to find that contractual seniority or reeall from layoff

provisions granted strikers greater reeall rights than

established by statute.” Morrell also relies upon Bie-Sei-

ence Laboratories, 209 NLRB No. 106, 85 LRRM 1568

(1974), for the proposition that “unreinstated economic

strikers do not have the statutory right to reeall in

accordance with a collective bargaining agreement pro-

Vision covering recall from layoffs.”

Most importantly, in Morrell’s view, when the strike

itself is a breach of contract, the Union should not be

allowed to claim that that Very contract grants strikers

“a right to displace permanent replacements. See Lan-

caster Iron Works, 4 LA 76 Brandschain 191657 See,

also, cases cited in n. 3, supra.

With respect to the anti-discrimination provision, Mor-

rell points out that its agreement is made in accord-

ance with applicable laws.” From this. it reasons that

the protection available under the NLRA is sufficient and

“no further analysis nor udjudication need be under-

taken” to enforce this provision. Secondly, Morrell con-

tends that this provision cannot be upplicable to a strike

E. g.. Anderson Tully Co. & LA 7 Hart 19.86: Far

Aluminum Castings C, 67 LA 613 Smith 1976 : Federal Rear-

mas Cu. Inc. 48 LA 179 (Turkus 1966 : Wathen Die. 40 LA 267

Loucks 1963 ; Swift & Co. & LA 295 Gregory 1947).

Ola

which itself was a breach of contract. Finally, Morr

contends that the Union's request for reeall e

permanent employees would iteelf diseriminate on

basis of nonmembership in the U mien,

DISCUSSION AND CONCLUSIONS

The fundamental iseue presented to the Arhitrate:

this stage is what rights, if any, this contract giv

sympathy strikers vis a vis the cross-overs and repac

ments. The Union grounds its arguments in the a cmp

tion that the strike was not a breach of the contrac

Morrell relies, fundamentally, on its ascertion tha’

strike was a breach of contract. Hefore reaching

other issue it is necessary to address thic fundamer

disagreement in the very premises of the partie ace.

ments,

I. Was the Strike a Breach of Contract?

a. The Court Decisions

In support of its position that the strike was aw!.

the Union points to the Righth Circuit's statement *)

“Itlo the extent that the district court found tha’

the parties’ no strike clause did not prohibit <ompatt

strikes . . we agree.” John Morre!) & © Loca

Union No. 305A, 804 F.2d 457, 460 (1958. The Ar

bitrator notes that the court also refused t find on.

duct by Local 304A had “waived its right to engage >

further lawful strike activity.” 804 F.2d at 461. 2. 7

In reply, Morrell labels these comments “dicta” * ar

then points out that the district court an

allowed a jury to reach the issue of whether the <>

* This characterization presumally recult. from ° .

cuit’s limited holding that a preliminary in cect)» sin

Since even an unlawful strike cannmet always |

ments regarding the legality of «vrmathy «or kes

newessary te the dewision. See Rr

42% U.S. 297, 92 LRRM σ⁹j,ỹ (1976)

92a

voilated the contract, and the jury has returned a ver-

dict for Morrell. Even as this decision is being written,

a trial on damages is set.

The Arbitrator does not agree that the Eighth Circuit

discussion of the legality of sympathy strikes under this

contract language is dicta. That Court set out the exact

contract language verbatim and not once, but twice, ex-

pressed the opinion that the language allowed sympathy

strikes. The conclusion that sympathy strikes were al-

lowed directly supports a decision that an injunction was

not permitted—the very holding of that court. While

that holding could be reached by other routes, this does

not make the Eighth Cireuit's statements superfluous.

It is true that the disrict court’s decision is more directly

on point, since it concerns this very strike. But the

Eighth Circuit will almost surely have the last word.

Further, the Arbitrator does not have the benefit of a

transcript of the trial, the instructions of the trial court,

or any record evidence which would give credience to

that court's decision to submit this issue to a jury. Thus,

the Arbitrator cannot be sure of the basis for that deci-

sion. Nor can the Arbitrator be sure the Eighth Cir-

cuit will abide by its prior decision, dicta or not.

In the end, the Arbitrator feels he has the obligation

to make an independent evaluation and finding on the

issue of whether the contract allows sympathy strikes.

The Arbitrator cannot predict what the final judgment

of the courts will be; and the Arbitrator is compelled

and authorized by the language of the contract itself to

interpret and construe its obligations. See, United Steel-

workers of America „. Warrior & Gulf Navigation Co.,

363 U.S. 574 (1960)." Clearly, the Eighth Circuit's opin-

*The Arbitrator, of course, is not bound by the same rules of

rea judicata and collateral estoppel as courts are. See, e. g., Elkouri

& Elkouri, How Arbitration Works (4th Ed. 1985), p. 390, at

nn. 80-81. This results in part from the limited sxrounds for setting

aside an arbitration award; mere errors of fact or law have long

93a

ion places significant weight in favor of finding that the

sympathy strike was permitted under this contract.

b. Waiver of the Right to Sympathy Strike

On the merits, the Union contends that the no-strike

clause clearly allows sympathy strikes. The clause is so

clear, in the Union's view, that the parol evidence rule

applies and excludes any consideration of secondary evi-

dence. Morrell, without producing parol evidence, points

to the jury’s conclusion that, as a matter of fact, sym-

pathy strikes were forbidden.

This Arbitrator is rarely impressed by an effort to rely

upon the parol evidence rule. As a general matter, the

true intent of the contract, if it can be found, is every-

thing. If negotiating history and practice negate the

apparently clear meaning of a provision, language must

yield to evidence of actual agreement. On the other hand,

the language of the contract is the first and best evidence

of the parties’ true intent; the further secondary evidence

departs from apparently clear meaning, the harder it

becomes to credit such evidence. Finally, the law renders

certain provisions of collective bargaining contracts ‘terms

of art,’ which have such a clear and generally accepted

meaning that only one interpretation of the language in

issue is plausible. No-strike clauses comprise one of

those areas in which the law has created a complex frame-

work for construing the contract. For the specific rea-

sons that follow, the Arbitrator has concluded that past

and current law on the waiver of smypathy strikes

through no-strike clauses, and the language of this clause,

compels the conclusion urged by the Union. A construc-

— «—_—-— ~--

been insufficient to set aside an arbitration award. However, were

the Arbitrator confronted with uniform decisions, or a final decision

not subject to appeal, that would we

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