Appendix — Owens-Illinois, Inc. v. Glass, Molders, Pottery, Plastics & Allied Workers International Union
Supreme Court brief1992
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No. 90- i KOV 13 1991
“QFFICE OF THE CLERK
IN THE
Supreme Court of the United States
October Term, 1991
OWENS-ILLINOIS, INC.,
Petitioner,
VS.
GLASS, MOLDERS, POTTERY, PLASTICS AND
ALLIED WORKERS INTERNATIONAL UNION,
AFL-CIO and LOCAL UNION NO. 4,
Respondents.
PETITION FOR WRIT OF CERTIORARI TO THE UNITED
STATES Court OF APPEALS FOR THE THIRD CIRCUIT
APPENDIX TO PETITION
FOR WRIT OF CERTIORARI
CaRY RODMAN COOPER
Counsel of Record
MARGARET J. LOCKHART
Cooper, STRAUB, WALINSKI
& CRAMER
900 Adams Street
Toledo, Ohio 43624
(419) 241-1200
Attorneys for Petitioner
Of Counsel:
R. JEFFREY BIXLER
One SeaGate, 23rd Floor
Toledo, Ohio 43666
THE GATES LEGAL PUBLISHING CO., CLEVELAND, OHIO—TEL. (216) 621-5647
TABLE OF CONTENTS TO APPENDIX
Judgment Entry of the United States Court of
Appeals for the Third Circuit (July 23, 1991)... Ai
Opinion of the United States District Court
ge | ORE Oe ota rent ae ene A3
Order of the United States District Court
IT PR ris i nace ase naeese ous A33
Decision and Award of Arbitrator (July 3,
Order of the United States Court of Appeals for
the Third Circuit Denying Petition for
Rehearing (August 15, 1991) ................ A61
Al
APPENDIX
JUDGMENT ENTRY OF THE UNITED
STATES COURT OF APPEALS FOR
THE THIRD CIRCUIT
(Dated July 23, 1991)
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 91-5159
GLASS, MOLDERS, POTTERY, AND ALLIED
ALLIED WORKERS INTERNATIONAL UNION;
AFL-CIO; LOCAL UNION 44
Vv.
OWENS-ILLINOIS, INC.;
OWENS-ILLINOIS, INC.;
counter-claimant
Vv.
GLASS, MOLDERS, POTTERY, AND ALLIED
ALLIED WORKERS INTERNATIONAL UNION;
AFL-CIO; LOCAL UNION #4
counter-defendant
OWENS-ILLINOIS, INC.
v.
GLASS, MOLDERS, POTTERY, AND ALLIED
ALLIED WORKERS INTERNATIONAL UNION;
AFL-CIO, CLC
Owen-Illinois, Inc.
Appellant
A2
Appeal from the United States District
Court for the District of New Jersey
(Civil Action Nos. 90-03236 and 90-03291)
District Judge: Honorable John F. Gerry
Argued on July 16, 1991
BEFORE: S tovirer, Chief Judge, GREENBERG and
Seitz, Circuit Judges.
JUDGMENT ORDER
After consideration of the contentions raised by
appellant, it is
ADJUDGED AND ORDERED that the judgment
of the district court be and is hereby affirmed.
Costs shall be taxed against appellant.
By the Court,
is) SkE1Tz
Circuit Judge
ATTEST:
's/ SatLy MRvos
Clerk
A3
OPINION OF THE UNITED STATES
DISTRICT COURT
(Filed February 4, 1991)
NOT FOR PUBLICATION
Civ. Nos. 90-3236, 3291 (MHC)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
GLASS, MOLDERS, POTTERY, PLASTICS
and ALLIED WORKERS INTERNATIONAL UNION,
AFL-CIO and LOCAL UNION NO. 4,
Plaintiffs,
Vv.
OWENS-ILLINOIS, INC.,
Defendant.
and
OWENS-ILLINOIS, INC.,
Plaintiff,
Vv.
GLASS, MOLDERS, POTTERY, PLASTICS
and ALLIED WORKERS INTERNATIONAL
UNION, AFL-CIO,
Defendant.
OPINION
A4
APPEARANCES:
James Katz, Esquire
Robert F. O’Brien, Esquire
Tomar, Simonoff, Adourian & O’Brien
41 South Haddon Avenue
Haddonfield, New Jersey 08033
James F. Hammill, Esquire
McCarter & English
The Commerce Center
1810 Chapel Avenue West
Cherry Hill, New Jersey 08002
GERRY, Chief Judge:
Presently before the Court is a motion for summary
judgment by plaintiffs, Glass, Molders, Pottery, Plastics
and Allied Workers International Union AFL-CIO and
its Local Union Number 4 (collectively ‘‘the Union’’) to
enforce an arbitration award and for prejudgment
interest, costs and reasonable attorneys fees, and a cross-
motion for summary judgment by defendant, Owens-
Illinois, Inc. (““Owens’’) to vacate the arbitration award.
For the reasons set forth below, the Union’s motion will
be granted and Owens’ cross-motion will be denied.
I. FACTUAL AND PROCEDURAL HISTORY
A. Introduction
For over 25 years, Owens and the Union have been
parties to a_ succession of collective bargaining
agreements covering the terms and conditions of
employment for employees of Owens’ metal closure plant
in Glassboro, New Jersey. The latest collective
bargaining agreement which was in effect at all times
material to this action became effective April 1, 1986,
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and was to expire March 31, 1989. On or about January
5, 1989, however, Owens sold the Glassboro plant
pursuant to an Asset Purchase Agreement (‘‘the
Agreement’’) entered into on November 14, 1988 between
Owens and Anchor Hocking Corporation (‘‘Anchor’’).
Anchor acquired the plant for approximately $36 million.
As a condition of the sale, Section 13(b) of the
Agreement expressly provided that Owens would absolve
Anchor from assuming any obligation under any
collective bargaining agreement.' The Agreement also
provided that Anchor would have no obligation to hire
any of Owen's Glassboro employees, but that Owens
would nonetheless encourage its employees to work for
Anchor. Additionally, Owens agreed not to solicit or
offer employment to any employee for 180 days following
the closing. Agreement, §13(a).
Anchor offered employment to all affected employees
upon the sale of the plant. On January 5, 1989, there was
a 100% turnout by the former Owens employees, and all
were eventually hired by Anchor. Accordingly, there was
no loss of work as a result of the sale. Anchor announced
its intention to negotiate a new agreement with the
Union as soon as possible and eventually entered into a
' The relevant provision provides:
Employee Agreements, Including Collective Bargaining
Agreements. It is understood and agreed that this Agreement
does not obligate Buyer to assume any of Seller's liabilities or
obligations under any collective bargaining agreement or other
employment agreement, express or implied, relating to persons
employed by Seller, and that, even if Buyer elects to assume
Seller's rights and prospective obligations under any such
collective bargaining agreement or other employment
agreement, in no event will Buyer assume any liability or
obligation arising out of any such collective bargaining
agreement or other employment agreement relating to any
transaction, event or activity occurring or condition or state of
facts existing at or prior to the time of the Closing.
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new 3-year collective bargaining agreement commencing
April 1, 1989. Prior to the new agreement, Anchor
continued the current wage rate, however, knowing it
was not bound by the Owens-Union collective bargaining
agreement, instituted a number of changes in the terms
of employment.’ These changes included the elimination
* Anchor posted the following press release to the new employees on
January 5, 1989:
It is my pleasure to inform you that effective today, Anchor
Hocking Packaging Co., a division of Newell Co., has acquired
Owens-Illinois’ plant here in Glassboro, New Jersey. We are
glad that we have combined your great product lines with
Anchor Hocking’s and we are enthusiastic about the future.
As your prospective new employer, we offer employment to
each and every one of you in accordance with this notice and
the attached summary of changes. While we have chosen not to
adopt the collective bargaining agreements between Owens-
Illinois and the Glass, Molders, Pottery, Plastics & Allied
Workers International Union, we will apply the working
conditions set forth in those agreements ... as modified by the
changes described in detaii in the attachment. Please read the
attachment carefully. We would like you to note that all current
wage rates are being. continued and, other than slightly
increased insurance premium contributions, no significant
changes are being made in your basic fringe benefits.
You may indicate your acceptance of the Company's offer of
employment by continuing to report for work in accordance
with your previously established schedule. Within the next few
days, after we have hired a substantial and representative
complement of employees, we will be able to determine whether
the law permits us to recognize and bargain with the union. As
soon as the law allows, we intend to commence negotiations
with the union over the terms of an initial labor agreement.
Naturally, during those negotiations, all terms and conditions of {
employment will be subject to bargaining.
We are confident that each employee who accepts our offer
for employment will enjoy being a part of the Newell family,
and we encourage you to join with us in tackling the challenges
of the future. If you have any questions, please raise them with
your supervisor or direct them to the personnel office.
s WILLIAM K. DoppsTAbDT é
Vice President, Human Resources
ee
A7
of severance pay, personal days off, a decrease in
employer contributions to retiree benefits, and an
increase in employee contributions to insurance plans.
Specifically, the summary of changes included the
following:
Side Agreement, Letters and Practices—Are not
binding on the Company.
Layoff Notice—All requirements of advance notice
for layoff, including but not limited to those set
forth in Article 3 of Owens-Illinois’ Union Shop
Contract, are eliminated.
Subcontracting—All_ restrictions against the
Company's management right to subcontract,
including but not limited to any restrictions set
forth in Article 30 of Owens-Illinois’ Union Shop
Contract, are eliminated.
Article 28 of Owens-Illinois’ Union Shop
Contract—All transfer, notice and other rights set
forth in this Article are eliminated.
Special Call Assignments—Any and all restrictions
against the work that may be performed by
employees summoned to work under a special call,
including but not limited to all restrictions set forth
in Article 5, Section 4(c) of Owens-Illinois’ Local
Union-Management Agreement, are eliminated.
Filling of Vacancies—Any and all restrictions
against the Company’s management rights to fill
vacancies, whether scheduled or unscheduled,
including but not limited to those set forth in
Section l(g) of the Owens-Illinois’ local Union-
Management Agreement, are eliminated.
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Arbitration—Upon lawful recognition of the union,
the Company will propose an interim written
agreement permitting the union to submit certain
disputes to arbitration as a matter of right and
reserving to the Company discretion to accept or
decline requests to submit other disputes to
arbitration. ...
Successors, Transferrees and Assigns—All
restrictions against the Company's management
right to sell or transfer the plant, including but not
limited to those set forth in Article 33 of Owens-
Illinois’ Union Shop Contract, are eliminated.
Cost of Living Allowances—Including but not
limited to all terms and conditions set forth in
Article 38 of Owens-lllinois') Shop Contract, are
eliminated.
Personal Days Off—Are eliminated.
Vacation Pay—Accrued vacation pay will not be
payable to employees discharged for cause.
Insurance—Employees will be required to contribute
15% of the total cost of the insurance plan selected
by each employee. Further, all rights to Company
paid insurance benefits following plant closure,
including but not limited to all rights set forth in
Article 21, Section 8(h) of Owens-Illinois’ Union
Shop Contract, are eliminated. ...
Retiree Benefits—As set forth in Article 20 of
Owens-Illinois’ Union Shop Contract, will be
continued. However, the Company will not
contribute more than the currently required $.18 per
employee hour actually worked.
Severance Pay—All rights to severance pay,
including but not limited to all rights set forth in
Article 31 of Owens-Illinois’ Union Shop Contract,
are eliminated.
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There is some dispute as to when the Union became
aware of the sale of the plant as well as the terms and
conditions of the Agreement. The Union maintains that,
although certain representatives of the Union heard
about the Agreement in November of 1988, they were
only informed that the sale was not final and was
dependent upon governmental approval. They were not
provided with a copy of the Agreement until four months
after the closing. The Union further maintains that they
were not consulted regarding the terms of _ the
Agreement during the negotiation process. Owens alleges
that the Union knew about the sale to Anchor
approximately six weeks before the closing, and that
Frank Cibo, the Union International Representative
assigned to Glassboro, learned by telephone on January
3rd that the sale would be finalized on January 5th and
that Anchor would not assume the collective bargaining
agreement. Owens maintains, and the Union does not
dispute, that the Union never undertook to urge Anchor
to assume the collective bargaining agreement prior to
the sale.
On January 6, 1989, the Union filed a grievance with
Owens as a result of the alleged losses incurred by the
employees upon the sale of the Glassboro facility to
Anchor. The grievance was denied and, in May of 1989,
Owens and the Union agreed to submit the matter to
arbitration where both parties would frame the issues for
the arbitrator. See Plaintiff's Exhibits 10 & 11 in
Support of Their Motion to Enforce the Arbitration
Award.
Several provisions of the Owens-Union collective
bargaining agreement form the basis of the dispute. The
most pertinent provisions include the following:
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ARTICLE 1
Duration
Section 1. This contract shall become effective
April 1, 1986, and shall continue in effect through
March 31, 1989, and as long thereafter as regular
negotiations for the making of a new Contract are in
progress.
Section 3. No changes may be made in this
Contract unless mutually approved by the Company,
the International Officers of the Glass, Pottery,
Plastics & Allied Workers and representatives of the
Local involved.
ARTICLE 9
Artibitration
Section 1. All disputes not settled pursuant to the
procedure set forth in Article 8, Grievance
Procedure, may be referred to arbitration by a notice
given to the Company or the Union by the other
within ten days after the conclusion of Step 3 of the
grievance procedure. Such notice shall be in writing,
setting forth the matter in dispute and the relief
requested.
Section 5. The arbitrator shall have no power to
add to, subtract from, or modify the terms of this
Contract or to set standards of production. The
arbitrator's decisons shall be final and binding upon
both parties.
All
ARTICLE 19
Retirement Income
Section 17. Effective 4/1/83, when the Company
elects to close a plant permanently, an employee
under age 60 whose employment is terminated as a
result of such closing on or after 4/1/83, may retire
and receive a pension benefit figured as if he were
age 60 based on his years and months of credited
service at the date of such closing, provided he has
thirty (30) or more full years of credited service at
the date of such closing.
ARTICLE 31
Severance Pay
If the Company elects to permanently close the
Glassboro Plant or a department, severance shall be
paid on the basis of 25 hours per credited year of
service with a maximum of 750 hours payable.
ARTICLE 33
Successors, Transferees and Assignees
This contract shall be binding upon the parties
hereto, their successors, transferees and assignees.
In the event the Company sells or transfers this
plant, this agreement shall remain in full force and
effect and be binding upon the purchaser or
transferee.
B. The Arbitrator’s Opinion
As previously agreed, both parties submitted a
statement of the issues for the arbitrator. Essentially,
three issues were presented concerning liability: (1)
whether Owens violated Article 33 of the collective
bargaining agreement by failing to condition the sale of
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the plant on the assumption by Anchor of the collective
bargaining agreement; (2) whether Owens violated
Article 31 of the collective bargaining agreement by not
making severance payments to its former employees; and
(3) whether Owens violated Article 19, Section 17 of the
collective bargaining agreement by failing to implement
the pension benefit provisions applicable to the class of
employees defined in that provision.*
(1) Article 33—The Successorship Clause
The arbitrator, Rolf Valtin, first addressed the issue
concerning the Article 33 successorship clause. He
summarized the five arguments put forward by Owens,
which can be further summarized: (1) the language of
Article 33 does not provide for an active duty to be
performed by Owens; rather, it is a passive successorship
clause which frees Owens of liability if the purchaser
does not assume its obligation to be bound by the
collective bargaining agreement; (2) the parties did not
intend for Owens to be liable in this instance since, in
prior negotiations between Owens and the Union, the
Union proposed and Owens rejected, a more extensive
successorship clause which expressly obligated Owens to
require any proposed purchaser to assume the terms of
the collective bargaining agreement; (3) the parties did
not intend for Owens to be liable in this instance since,
in subsequent negotiations between the Union and
Owens covering other facilities, the Union proposed, and
Owens accepted, the following addition to the
successorship clause which was previously identical to
Article 33: ‘“‘and the Company agrees it will include in
the purchase agreement that this Contract is binding on
* As discussed infra, the Union provided six issues to the arbitrator.
In addition to the three issues paraphrased above, the Union added
the following after each issue: ‘If so, what is the proper remedy?”’
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the purchaser or transferee;’’ (4) Owens’ position is in
accordance with the ‘“‘successorship doctrine,’’ which
holds that the purchaser of a bona fide sale of an
employing company may only be obligated to bargain
with a prior union, but does not require that the new
employer be bound by the previous labor agreement; and
(5) the Union should be estopped from seeking to hold
Owens liable since it did not assert its rights against
Anchor. See, Owens-Illinois, Inc., at 8-12 (unreported)
(Valtin, Arb.) [hereinafter ‘‘Arb. Op.’’] Plaintiff's Exhibit
1 in Support of Their Motion to Enforce the Arbitration
Award.
Arbitrator Valtin rejected each of these arguments.
He initially observed that ‘‘there simply cannot be any
question that Article 33 was breached.”’ Arb. Op. at 12.
He reasoned that the duration was a term of the contract
and that, when Owens treated the contract as no longer
binding with the arrival of the successor, three months
short of its duration, they clearly breached the first
sentence of Article 33 which states that ‘‘[t]his contract
shall be binding upon the parties hereto, [and] their
successors ....'' Jd. He found that the second sentence
of Article 33 was ‘‘more particularized’’ than the first
sentence, since it presupposed the sale or transfer of the
plant and required that the agreement remain in full
force and effect and be binding on the purchaser or
transferee. Since there was a sale of the plant three
months pricr to the agreement’s duration and the
purchaser was not bound by the agreement, a ‘‘clearer
disregard of a clear commitment is difficult to imagine.”’
Id. at 13. He stated that the commitment of Article 33
must be viewed as a commitment by Owens to the
Union, since the parties to the agreement were the two
signatories to the agreement and no others. Moreover,
the commitment was in no way conditional on finding a
purchaser who would assume the agreement.
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The arbitrator also stressed that this was not a case
where the assumption or non-assumption of the collective
bargaining agreement was overlooked in the negotiating
process, nor was it one in which the purchaser gave an
understanding that the agreement would be kept in
effect and then abandoned it. Rather, the negotiators all
had copies of the collective bargaining agreement and
were aware of Article 33 and acted in piain defiance of
that provision. Because Owens was a partner in the
adoption of Section 13(b) of the Agreement, Arbitrator
Valtin rejected Owens’ passive/active theory as ‘‘not
even deserving of a sympathetic ear on _ the
circumstances of the present case.’ Jd. at 14.
Moreover, the arbitrator did not view the federal
successorship doctrine as a matter of concern in this case
since Article 33 does not state that the purchaser is to
recognize the Union and engage in bargaining for a new
agreement. “‘[A]ls to the commitment which is made
under Article 33, he added, “there is no contention
that it is to be discarded, or otherwise to be treated as
unenforceable, for lack of validity under the law.” /d.
(emphasis in original).
As to Owens’ contentions regarding prior and
subsequent negotiations with the Union for the
Glassboro and other plants, the arbitrator held that the
additional language was, essentially, superfluous; it
merely implemented what was already required under the
provision as written.
The arbitrator rejected Owens’ estoppel argument as
burden-switching. He questioned whether the Union
could have done anything differently. They clearly could
not have been a rightful participant in the negotiations
leading to the Agreement. After the consummation of
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the Agreement, although the Union could have
insisted—presumably by striking—on the resurrection of
the Owens-Union collective bargaining agreement, this
course of action should not be a condition of arbitrating
the fulfillment of Owens’ promise under Article 33.
Having concluded that Owens breached Article 33 of
the collective bargaining agreement, the arbitrator next
addressed the remedy. He held that, although the
“technically correct’ answer is to undo what has
wrongfully taken place, ‘‘this would mean voiding the
sale as an improper act under Article 33, the retroactive
application of the [Owens-Union agreement] through its
expiration date with whatever make-whole consequences
might be involved, and the retroactive negotiation of a
new [Owens-Union agreement], with the former
agreement as the base from which the parties would have
negotiated for the new Agreement, with whatever make-
whole consequences this would entail.’’ Jd. at 18.
However, in view of the enormous difficulties this would
involve, likely throwing the parties into protracted
litigation, and because neither party has asked for this
remedy, Arbitrator Valtin treated the severance and
retirement income issues as linked with the remedy
under Article 33. Jd. at 19. He noted that those two
issues could not have arisen if the collective bargaining
agreement had remained in effect and, accordingly,
proceeded with the severance issue.
(2) Article 31—Severance Payments
The next key issue was whether Owens
‘permanently close(d]’’ the Glassboro plant, triggering
the severance payment formula set forth in Article 31.
The purpose of severance pay, the arbitrator observed, is
to cushion the impact for employees who have been
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dismissed without expectation of returning to work.
Another purpose, he surmised, was that it may be
viewed as a reward for past service in the face of loss of
employment. Jd. at 22. However, ‘‘[hjere, both the plant
and its operations stayed intact and there was no
cessation—indeed, not even an_ interruption—in
employment. And if it is granted—as it must—that the
plant was not permanently closed within the usual
meaning of the term, it must also be granted (in the
absence of evidence respecting the negotiating
discussions) that the plant was not permanently closed
as the parties intended the term to be applied when
they adopted Article 31.” Jd.
Nonetheless, he determined that the severance pay
called for in Article 31 is properly applied in rectification
of the violation of Article 33. He reasoned that
in overall impact, the loss was severe and involved
hardships which are not dissimilar to the hardships
which Article 31 is designed to cushion. Rather than
remain in employment with every Agreement right
kept intact, the employees: were permanently
dismissed from [Owens] employment, had no right to
be employed by Anchor, went to work under
Anchor's unilaterally established terms, and ended up
(judging by what evidence there is respecting the
new Anchor-[Union] Agreement) faring substantially
worse than they would have fared had their rights
under Article 33 been observed.
Id. at 23-24.‘
‘The Union submitted tabulations to the arbitrator of the amount of
severance payments due to the employees. The average per-employee
payment came to approximately $5,500, and the sum for the
workforce as a whole came to approximately $2 million. /d. at 24.
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(3) Article 19 Section 17—Special
Pension Benefits
Finally, the arbitrator summarily granted the special
pension benefits called for in Article 19, Section 17. He
found that the issue involved only a_ handful of
employees,* and that the triggering language (‘‘when the
Company elects to close a plant permanently’’) was of
the same import as the language used in Article 31.
Accordingly, he granted the benefits for the same
reasons given in the previous issue.
C. The Parties’ Contentions
From their voluminous submissions to the Court, we
can briefly summarize the parties’ respective positions.
In essence, the Union maintains that Owens cannot
satisfy the strong showing required to vacate an
arbitration award. Arbitrator’s awards are entitled to
great deference and may not be vacated merely because
the court disagrees with the arbitrator's factual or legal
interpretations. Here, the arbitrator’s analysis was not
only rational, it was correct. Additionally, arbitrators are
give [sic] wide latitude to fashion a remedy and,
accordingly, the remedy imposed by Arbitrator Valtin
must be enforced.
Owens maintains, in essence, that the arbitrator’s
award constituted a rewriting of the parties’ labor
agreement in plain violation of the express restriction in
Article 9 of the agreement which states that ‘‘[t]he
arbitrator shall have no power’to add to, subtract from,
or modify the terms of this contract ....’’ They seize
upon the arbitrator’s finding that “‘the plant was not
rE appears that eight employees met the eligibility requirements of
Article 19.
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permanently closed as the parties intended the term to
be applied,” and argue that, rather than simply
misinterpreting the contract, the arbitrator improperly
modified the contract. Additionally, the same can be said
for the arbitrator's finding that Owens had an
affirmative obligation to condition the sale on the
purchaser assuming the collective bargaining agreement.
Finally, Owens maintains that, even if they are liable
under the agreement, the arbitrator (1) prematurely
reached the remedy issue, and (2) did not have support in
the record to award the $2 million remedy.
II. DISCUSSION
A. Summary Judgment Standard
The standard for granting summary judgment
pursuant to Federal Rule of Civil Procedure 56 is a
stringent one. Summary judgment is appropriate only if
all the probative materials of record ‘“‘show that there is
no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of
law.” Fed. R. Civ. P. 56(c). See, eg., Hersh v. Allen
Products Co., 789 F.2d 230, 232 (3d Cir. 1986); Lang v.
New York Life Ins. Co., 721 F.2d 118, 119 (3d Cir. 1983).
In determining whether there remain any genuine issues
of material fact, the court must resolve all reasonable
doubt in favor of the nonmoving party. Meyer v. Riegel
Products Corp., 720 F.2d 303, 307 n.2 (3d Cir. 1983), cert.
dismd., 465 U.S. 1091 (1984); Smith v. Pittsburgh Gage
& Supply Co., 464 F.2d 870, 874 (3d Cir. 1972).
Significantly, ‘‘at the summary judgment stage the
judge's function is not himself to weigh the evidence and
determine the truth of the matter but to determine
whether there is a genuine issue for trial."’ Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).
is ntereieenennneseanmmnmaamaiaaial
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Under this standard, ‘‘the mere existence of some
alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for
summary judgment.’ Anderson, 477 U.S. at 247-48
(emphasis in original). Indeed, where the moving party
has made a properly supported motion for summary
judgment, it is incumbent upon the nonmoving party to
come forward with specific facts to show that there is a
genuine issue of material fact for trial. Jd. 477 U.S. at
248. Thus, once the moving party has carried its burden
of establishing the absence of genuine issues of material
fact, the nonmoving party ‘‘may not rest upon mere
allegations or denials’ of its pleading, Fed. R. Civ. P.
56(e), but must produce sufficient evidence to reasonably
support a jury verdict in its favor. Jd., 477 U.S. at 249;
J.E. Mamiye & Sons, Inc. v. Fidelity Bank, 813 F.2d 610,
618 (3d Cir. 1987) (Becker, J., concurring), and not just
‘‘some metaphysical doubt as to matenal facts.”
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 586 (1986). Thus, if the non-movant’s evidence
is merely ‘‘colorable’’ or is ‘‘not significantly probative,”
the court may grant summary judgment. Anderson, 477
U.S. at 249-50.
B. The Arbitral Award
In the Steelworkers trilogy, the Supreme Court made
clear that courts play an extremely limited role when
asked to review the decision of an arbitrator. See, United
Steelworkers of America v. American Mfg. Co., 363 U.S.
564, 568 (1960); United Steelworkers of America v.
Enterprise Wheel & Car Corp., 363 U.S. 593, 596 (1960);
see also, United Paperworkers International Union uv.
Misco, Inc., 484 U.S. 29, 36 (1987). Indeed, courts may
not review the merits of an award even where there have
hii tesseteeer ene
A20
been serious errors of fact or misinterpretation of the
contract. Misco, 484 U.S. at 36. Otherwise, the federal
policy of settling labor disputes would be undermined if
courts had the final say on the merits of awards. /d.
(citing Enterprise Wheel, 363 U.S. at 596). The test is
whether ‘‘the arbitrator’s award ‘draws its essence from
the collective bargaining agreement,’ and is not merely
‘his own brand of industrial justice." /d. (quoting
Enterprise Wheel, 363 U.S. at 597). This test has been
strictly applied in this Circuit. It has been observed that
‘federal labor law elevates labor arbitrators to ‘an
exalted status.’ '’ News America Publications, Inc., Daily
Racing Form Div. v. Newark Typographical Union, Local
103, 918 F.2d 21, 24 (3d Cir. 1990) (quoting Ludwig
Honold, Mfg. Co. v. Fletcher, 405 F.2d 1123, 1126 (3d
Cir. 1969)). Just recently, in News America, Judge
Higginbotham emphasized the courts’ limited, indeed
“undemanding’”’ role:
As long as the arbitrator has arguably construed or
applied the contract, the award must be enforced,
regardless of the fact that a court is convinced that
[the] arbitrator has committed a serious error. ...
This Court has held that there must be absolutely
no support at all in the record justifying the
arbitrator's determinations for a court to deny
enforcement of the award. ... Thus, only where
there is a ‘manifest disregard of the agreement,
totally unsupported by principles of contract
construction and the law of the shop, may a
reviewing court disturb the award.’
In this regard, a court may not review the
merits of the arbitral decision. ... A court does not
review the award to ascertain whether the arbitrator
has applied the correct principles of law. ... An
arbitral award may not be overturned for factual
error, ... or because the court disagrees with the
arbitrator's assessment of the credibility of
A21
witnesses, or the weight the arbitrator has given to
testimony. ... It should be clear that the test used
to probe the validity of a labor arbitrator's decision
is a singularly undemanding one.
Id. (citations omitted; emphasis in original).
It must be borne in mind, however, that an
arbitrator's authority to settle disputes under a collective
bargaining agreement is contractual in nature, and is
limited to the powers that the agreement confers. Leed
Architectural Products, Inc. v. United Steelworkers of
America, Local 6674, 916 F.2d 63, 65 (2d Cir. 1990). The
arbitrator ‘‘may not shield an ‘outlandish disposition of a
grievance from judicial review ‘simply by making the
right noises—noises of contract interpretation.’” J/d.
(quoting Ethyl Corp. v. United Steelworkers of Am., 768
F.2d 180, 187 (7th Cir. 1985), cert. denied, 475 U.S. 1010
(1986)). Thus, where the court determines that the
arbitrator violated the terms of the agreement, the court
should not enforce the award. See, e.g., Pennsylvania
Power Co. v. Local Union No. 272 of International
Brotherhood of Electrical Workers, 886 F.2d 46, 49-50 (3d
Cir. 1989) (arbitrator's determination that grievance
concerning evaluation and compensation for newly
created position was arbitrable was based on the general
desirability of arbitration and a syllogistic interpretation
of the terms of the labor agreement and, thus, exceeded
the scope of his authority); see also, United Food &
Commercial Workers Union, Local 1119 v. United
Markets, Inc., 784 F.2d 1413, 1415 (9th Cir. 1986).
Owens maintains that the arbitrator exceeded his
authority by reading an affirmative obligation to secure
Anchor's assumption of the labor agreement into Article
33, where none existed. Whether or not this is so
depends on how one views Owens’ contractual obligation.
Owens, by virtue of Article 33, made an obligation that
heise cael iene
A22
the collective bargaining agreement, in its entirety,
would ‘“‘be binding upon the parties hereto, their
successors, transferees and assigns.’’ Owens, in effect,
repudiated the contract three months prior to_ its
mutually agreed upon duration. This was a clear breach
of Article 1, Sections 1 and 3 (duration) as well as Article
33. Stating that Owens had an affirmative obligation to
secure the purchaser's assumption of the agreement may
be viewed as simply another way of recognizing that
Owens would be liable to the Union if the purchaser did
not assume the agreement. Moreover, the arbitrator
correctly observed that Owens and the Union were the
only signatories to the contract. Thus, they could not
purport to impose liability on a non-signatory third
party. Cf. Howard Johnson Co. v. Detroit Local Joint
Executive Board, 417 U.S. 249, 258 n.3 (1974) (mere
existence of successorship clause cannot. bind successor
to substantive terms of predecessor's collective
bargaining agreement). Accordingly, the provision in
Article 33 that
lilIn the event the Company sells or transfers this
plant, this agreement shall remain in full force and
effect and be binding upon the purchaser or
transferee
must be read as an obligation by Owens to the Union.
When Owens sold the plant to Anchor and expressly
agreed that the purchaser would not be bound by the
collective bargaining agreement, it breached this
obligation to the Union, and the Union was damaged
thereby. Consequently, the arbitrator's conclusion that
Owens had an affirmative obligation to secure the
assumption by the purchaser, is grounded in sound
principles of contract construction. But see, Central
States, Southeast and Southwest Areas Pension Fund v.
PYA/Monarch of Texas, Inc., 851 F.2d 780, 783 (5th Cir.
A23
1988) (predecessor employer not obligated to continue
contributions to pension fund on _ theory that
successorship clause obligated employer to ensure that
successor employer would adopt predecessor's collective
bargaining agreement; court distinguished arbitration
opinions which held to the contrary).
The flaw in Owens’ argument is that almost every
interpretation of a contractual provision which does not
comport with another's interpretation of the same
provision may be viewed by the latter as an addition to
or modification of the contract. It is a leap in logic which
is at once easy to make and, potentially threatening to
the policies underlying federal iabor law. While there are
rare instances where an arbitrator may attempt to
impose his brand of industrial justice by adding to or
modifying a contract, the instant case is simply not one
of them.
Owens contends that the arbitrator's award should
be vacated since a requirement that a purchaser assume
the collective bargaining agreement would violate public
policy as embodied in the National Labor Relations Act
(‘NLRA”), 29 U.S.C. §§151 et seg. (West 1973 & Supp.
1990). Owens notes that an employer is prohibited by
section &(a)(2) of the NLRA from recognizing or
bargaining with a minority union. 29 U.S.C. $158. The
public policy set forth in the NLRA “represents well
defined and dominant public policy.’’ Van Waters &
Rogers, Inc. v. International Brotherhood of Teamsters,
Local Union 70, 913 F.2d 736, 742 (9th Cir. 1990). In this
case, had Anchor decided not to hire a majority of its
workforce from the bargaining unit, (which it had the
right to do, see NLRB v. Burns International Security
Services, Inc., 406 U.S. 272 (1972)), it would have
violated federal labor law by recognizing a minority
union. Rather, Anchor's duty to bargain with the Union,
under federal law, did not arise until it hired a majority
A24
of its workforce from the former bargaining unit. See
Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S.
27 (1987). Courts will refuse to enforce an arbitrator's
award that violates the law or public policy. /d., 913 F.2d
at 743; George Day Construction Co. v. United
Brotherhood of Carpenters & Joiners, Local 354, 722 F.2d
1471, 1477 (9th Cir. 1984).
Owens’ contention is without merit. First, the
argument is merely hypothetical in this case since
Anchor did hire a majority of its workforce and could
have contractually obligated itself, perhaps conditioned
on NLRA requirements, to assume the prior collective
bargaining agreement. See, generally, R. Gorman, Labor
Law 125 (1976) (‘successor employer may, of course,
assume obligations greater than those required by law
and may, for example, expressly agree to abide by the
predecessor's contract if the union is willing’’). More
important, however, is the fact that the Union does not
seek specific performance from Anchor. Rather, it is
seeking contractual damages from Owens for breach of
| the successorship clause by Owens’ failure to bind
Anchor to the collective bargaining agreement. In
Association of Flight Attendants v. Delta Air Lines, Inc.,
879 F.2d 906 (D.C. Cir. 1989), cert. denied, 110 S. Ct.
1781 (1990), the Association of Flight Attendants
("AFA"), which represented the flight attendants of
Western Airlines, Inc., sought damages against Delta
Airlines, Inc. for Western's breach of a successorship
clause (similar to the clause in this case)* when Western
* The clause in that case stated:
This agreement shall be binding on any successor or merged
Company or Companies, or any successor in the control of the
Company, its parent(s) or subsidiary(ies) until changed in
accordance with the Railway Labor Act, as amended.
879 F.2d at 907.
ed
centennial
A25
was acquired by Delta and failed to bind Delta to the
Western-AFA collective bargaining agreement.’ In
considering whether the claim was arbitrable, the D.C.
Circuit stated: ‘‘That AFA no longer has the right to
specific enforcement of the successorship clause,
however, simply does not answer the question whether
Delta is answerable in damages for Western's alleged
pre-merger breach of that clause.’ Jd. at 910. The court
held that an arbitrator could reasonably find that
Western was obligated by the successorship clause to
bind any merger partner to the collective bargaining
agreement. Jd. See also, Howard Johnson, 417 U.S. at
257-58 (where successor did not assume terms of
predecessor's collective bargaining agreement and
predecessor agreed to arbitrate with union, ‘‘presumably
this arbitration will explore the question whether the
[predecessor] breached the successorship provisions of
their collective-bargaining agreement, and what the
remedy for this breach might be’’) (footnote omitted).
Accordingly, because we hold that the arbitrator's ruling
did not violate public policy, the award can not be
vacated on those grounds.
These cases also answer Owens’ contention that the
Union should have first arbitrated the dispute with
Anchor. Because Anchor hired every Glassboro
employee, the Union could have compelled Anchor, under
the Wiley successorship doctrine, to arbitrate its
obligations under the successorship clause. See John
Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1964).
We agree with the arbitrator's characterization of this
argument as burden-switching. Under Wiley and Burns,
although Anchor had an obligation to recognize and
bargain with the Union upon the Union comprising a
majority of its own workforce, Anchor, as successor,
Western sought a court order compelling arbitration on the damages
issue.
A26
could not be required to assume Owen's labor contract.
See, generally, Burns, supra; R. Gorman, Labor Law 116-
25 (1976). The Union remained free to assert its rights
under the contract that it had with Owens.
Owens also maintains that, even if it is liable under
Article 33, the award of severance pay under Article 31°
was clearly a modification of the collective bargaining
agreement in light of the arbitrator's explicit finding that
“the plant was not permanently closed as the parties
intended the term to be applied. ..."’ Arb. Op., at 22. As
discussed above, the _ distinction between = an
‘interpretation’ and an ‘“‘addition’ to or “modification”
of a contract is easily blurred. Here, the arbitrator's
discussion immediately following the above-quoted
language indicates his finding that the loss to the
employees as a result of Owens’ breach of Article 33 was
not dissimilar to the type of hardships the parties
intended the severance payments to cushion, even
though the language used in Article 31 did not seem to
cover this situation. Thus, there was a “‘plant closing”
within the contemplation of the parties. Although the
arbitrator’s opinion appears to indicate that the Article
31 remedy was solely as a result of the Article 33 breach,
the opinion can also be read as his finding that the sale
*The foregoing discussion applies to the arbitrator's award of
retirement benefits under Article 19 as well as for the severance
award.
*This conclusion is consistent with other decisions which have
compelled severance payment upon the sale of assets even where the
employees continued to work for the purchaser and, especially where,
as here, the purchaser does not provide severance benefits. See Arco
Metals Co., 88 Lab. Arb. 1209 (Berkowitz, Arb. 1987); see generally,
E. Hennesay, Welfare Plans in Corporate Mergers and Acquisitions,
$IV.D. (P.L.1. 1989).
A27
of the plant triggered the language in Article 31."
Indeed the arbitrator's opinion is ambiguous, and it is
possible that he was merely imposing “‘his own brand of
industrial justice."’ There is adequate support in the
opinion, however, to conclude that the award draws its
essence from the collective bargaining agreement. It is
well settled that ambiguity in an arbitrator's opinion is
not grounds to vacate the award. ‘‘Arbitrators have no
obligation to the court to give their reasons for an award.
To require opinions free of ambiguity may lead
arbitrators to play it safe by writing no supporting
opinions. This would be undesirable for a well-reasoned
opinion tends to engender confidence in the integrity of
the process and aids in clarifying the underlying
agreement.” Enterprise Wheel, 363 U.S. at 598 (footnote
omitted). See also, Newark Morning Ledger Co. v.
Newark Typographical Union Local 103, 797 F.2d 162,
168 (3d Cir. 1986) (Mannsman, J., dissenting).
Moreover, our conclusion is consistent with the Third
Circuit's holding in News America. In that case, the
arbitrator interpreted a provision of a_ collective
bargaining agreement which provided that, in the event
'© The arbitrator's summary disposition of the third issue (the Article
19 pension benefits issue) supports this conclusion. The arbitrator
concluded that the triggering language of Article 19 was of the same
import as the triggering language of Article 31, therefore, the same
conclusion was mandated (i.e., that the sale of the plant triggered the
benefits and constituted a “plant closing’’ as the parties intended
that provision to apply). Arb. Op. at 25.
Moreover, to the extent the arbitrator may have awarded the
Article 31 benefits solely as a remedy for the Article 33 breach, we
hold that the award would still draw its essence from the collective
bargaining agreement. As noted above, this court's agreement with
the arbitrator's factual or legal conclusions is simply irrelevant to our
limited scope of review.
A28
the company and the union are unable to reach
agreement on wage adjustments, the following formula
would apply:
[t]he equivalent of any economic package granted by
the DAILY RACING FORM to New York Mailers
Union No. 6 or Newark Newspaper Printing
Pressman’s Union No. 8 (whichever is_ greater)
during the twelve months prior to November i of
any year will be automatically granted to Newark
Typographical Union members effective on
November 1.
News America, 918 F.2d at 22. The arbitrator found that
this provision was intended to maintain the economic
status of the defendant union with the Mailers and
Pressman unions. Accordingly, because those unions had
negotiated accelerations in their wage increases, the
arbitrator accelerated defendants’ wage increase by three
months. In an action to vacate the award, the district
court held that the term ‘effective November 1” cannot
plausibly mean August 1, and concluded that it should
not enforce an award that ignored the clear language of
the contract. Jd. at 23. The Third Circuit reversed,
stressing that ‘“‘the parties having authorized the
arbitrator to give meaning to the language of the
agreement, a court should not reject an award on the
ground that the arbitrator misread the contract.’ Jd. at
25 (quoting Misco, 484 U.S. at 38). Arbitrator Valtin did
no more in the present case by finding that Article 31
was triggered by the sale to Anchor. The arbitrator's
interpretation draws its essence from the collective
bargaining agreement and must be enforced.
Even assuming that Owens is liable to the Union
under the collective bargaining agreement, Owens
contends that Arbitrator Valtin exceeded the scope of his
authority since the parties allegedly did not submit the
A29
remedy issue to him and, moreover, there was
insufficient evidence in the record to support the remedy
that he ultimately imposed. In support of _ this
contention, Owens has submitted the affidavits of
Messrs. John D. Frechette, Owens’ Vice President of
Labor Relations and Arthur E. Grills, Owens’ Manager
of Group Insurance, who both assert that, when the
Union offered an exhibit showing the losses incurred as a
result of the changes in fringe benefits made by Anchor,
Owens and the Union ‘‘discussed the remedy issue and
they agreed that if liability was found by the Arbitrator
the parties themselves would attempt to resolve the
appropriate remedy while the Arbitrator retained
jurisdiction to decide the remedy if the parties were
unable to agree.’’ Affidavit of John D. Frechette, at 49;
affidavit of Arthur E. Grills, at 49. Moreover, the Union
specifically requested in their post arbitration brief and
reply brief that the arbitrator retain jurisdiction while
the parties sought to resolve the remedy. Defendant's
Exhibits A & B in Support of Their Crossmotion to
Vacate the Arbitration Award.
However, the record before us does not indicate that
either party ever notified the arbitrator of any
restrictions on his remedial authority. Although the
affidavits submitted by Owens suggest that the parties
themselves may have made such an agreement, there is
no basis upon which we can conclude that the arbitrator
exceeded the scope of his authority. The Union
specifically raised the remedy issue in its issue
statement. See note 3, supra. Although arbitrators may
not impose a remedy which directly contradicts the
express language of the collective bargaining agreement,
see, Leed Architectural, 916 F.2d at 65, so long as the
remedy draws its essence from the collective bargaining
A30
agreement, arbitrators have broad discretion’ in
establishing the scope of the issue before them and in
formulating remedies. As the Supreme Court noted in
Enterprise Wheel,
When an arbitrator is commissioned to interpret and
apply the collective bargaining agreement, he is to
bring his informed judgment to bear in order to
reach a fair solution of a problem. This is especially
true when it comes to formulating remedies. There
the need is for flexibility in meeting a wide variety
of situations.
363 U.S. at 597 (emphasis added). In this case, once the
arbitrator concluded that the severance and retirement
payments were warranted, the damages were determined
by reference to a specific formula and no additional
evidentiary hearing was necessary. Having concluded
that the arbitrator did not exceed the scope of his
contractual authority, our inquiry must end and his
remedy must be enforced.
Owens vehemently contends that any damages to
the Union beyond the approximately $32,000 in lost
fringe benefits is pure speculation. They maintain that
even if the company had required Anchor to accept the
collective bargaining agreement, the agreement would
have expired by its own terms and thus there was
absolutely no evidence that the Union would have ended
up in any better position had Anchor initially assumed
the previous agreement. It is precisely for this reason,
however, that Owens would have been wise to either wait
three months before selling the plant or, alternatively, to
negotiate for Anchor to assume the agreement for the
brief period remainng. Simply put, their argument would
have had more force on the negotiating table then it is in
this forum. No doubt, the parties had their own reasons
for consummating the sale at the time and in the manner
A31
in which they did. However, Owens’ argument is
completely undermined when the severance payments are
viewed as having been awarded by its own terms, in
accordance with in Article 31, rather than as an
approximation of damages for the breach of Article 33.
As discussed above, this conclusion has adequate
support in the arbitrator's opinion. This being the case,
the severance payments are calculated from the precise
formula found in the collective bargaining agreement and
there becomes no basis on which to conclude that this
award does not draw its essence from that agreement.
C. Prejudgment Interest, Costs and Attorneys Fees
Finally, the Union seeks prejudgment interest, costs
and attorneys’ fees. District courts have broad discretion
in determining whether to allow prejudgment interest in
claims arising under federal labor law. See Ambromovage
v. United Mine Workers, 726 F.2d 972, 982 (3d Cir.
1984). The general rule is that prejudgment interest is
awardable when the damages from breach of contract are
ascertainable with mathematical precision. FEazor
Express, Inc. v. International Brotherhood of Teamsters,
520 F.2d 951, 973 (3d Cir. 1975), cert. denied, 424 U.S.
935 (1976); see also, Feather v. United Mine Workers,
711 F.2d 530, 540 (3d Cir. 1983). Since the severance and
retirement payments constitutes a liquidated amount,
prejudgment interest is appropriate in this case.
We decline to award attorneys’ fees, however, since
Owens has not litigated in bad faith, vexatiously, or for
oppressive reasons. See, Mobil Oil Corp. v. Independent
Oil Workers Union, 679 F.2d 299, 305 (3d Cir. 1982). In
the absence of such bad faith, under the American rule,
each party bears the burden of its own legal expenses.
Id. Especially in light of the ambiguity of the
A32
arbitrator's opinion in this case, Owens has presented a
good faith challenge to the award and has done so
promptly.
Ill, CONCLUSION
For the aforementioned reasons, we hold that the
arbitrator's opinion and award draws its essence from
the Owens-Union collective bargaining agreement with
respect to both liability and remedy = imposed.
Accordingly, plaintiff's motion to enforce the arbitration
award will be GRANTED, and defendant's motion to
vacate the arbitration award will be DENIED. Each
party shall be responsible for its own costs, except that
defendant shall be responsible for prejudgment interest
from the date of the arbitration award.
An appropriate Order will be filed this day.
s) JOHN F. GERRY
Chief Judge
United States District Court
A33
ORDER OF THE UNITED STATES
DISTRICT COURT
(Filed February 4, 1991)
Civ. Nos. 90-3236, 53291 (MHC)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
GLASS, MOLDERS, POTTERY, PLASTICS and
ALLIED WORKERS INTERNATIONAL UINTON,
AFL-CIO and LOCAL UNION NO. 4,
Plaintiffs,
Vv.
OWENS-ILLINOIS, INC.,
Defendant.
and
OWENS-ILLINOIS, INC.,
Plaintiff,
v.
GLASS, MOLDERS, POTTERY, PLASTICS and
ALLIED WORKERS, INTERNATIONAL UNION,
AFL-CIO,
Defendant.
ORDER
This matter having come before the Court on
motions by plaintiffs for summary judgment to enforce
an arbitration award and for prejudgment interest, costs
A34
and reasonable attorneys fees and a cross-motion by
defendant, Owens-Illinois, Inc., for summary judgment
to vacate the arbitration award; and
For the reasons set forth in the Court's opinion filed
this day; and
For good cause shown,
It is on this Ist day of February, 1991 ORDERED
that plaintiffs) motion is hereby GRANTED and
defendant's, Owens-Illinois, Inc., motion is hereby
DENIED.
s JOHN F. Gerry
Chief Judge
United States District Court
A35
DECISION AND AWARD OF ARBITRATOR
(Dated July 3, 1990)
Grievance No. 4-%9-4
Glassboro Closure Plant
In the Matter of Arbitration
Between:
Owens-Illinois, Inc.
and
(ilass, Molders, Pottery, Plastics and
Allied Workers [International Union,
AFL-CIO Local Union No. 4
Here to be determined are three issues which arose
from the sale of the Glassboro Closure Plant by the
Company to Anchor Hocking Corporation in early
January 1989. The sale was consummated at a time
when the collective-bargaining Agreement covering the
plant's hourly employees had about three months to run.
It was the 3-year Agreement between the parties (O-l
and GMP) which beceme effective on April 1, 1986, and
which carried an expiration date of March 31, 1989. By
both parties’ positions, this Agreement is to be applied
in determining the present dispute.
The case took two days to hear; there are numerous
exhibits; both parties submitted post-hearing and reply
briefs of substantial length and admirable thoroughness;
and scores of arbitration and court decisions have been
cited (either directly or by way of what is contained in
one or another of the directly-submitted decisions). |
A36
have studied the record with care but do not believe that
any good purpose would be served by providing a full
review of it. To the contrary, my objective will be to
proceed in distilled fashion. The essence of what is posed
for decision will be shown as the issues are successively
dealt with. :
The facts of the case are not substantially in dispute.
The following is the framework:
—Q-I and GMP had entered into a series of
collective-bargaining Agreements covering the Glassboro
Closure Plant for some twenty-five years.
—In mid-November, 1988, the Company entered into
an Asset Purchase Agreement with Anchor Hocking
Corporation (hereafter referred to as simply ‘“‘Anchor’’).
The proposed purchase was conditioned upon federal-
regulatory approval, obtained a few weeks later. The
purchase price was about $36 million.
—GMP'’s International President was made aware of
the probable sale by O-I’s Vice President for Labor
Relations in November and of the fact that approval had
been obtained, and that finalization was in the making,
in December.
—GMP’s International Representative for the plant
was made aware of the probable sale by the Plant
Manager in mid-November; he visited the plant in late-
November and had discussions about the probable sale
with the plant’s Personnel Manager; and he learned by
telephone on January 3 both that the transaction would
be finalized on January 5 and that Anchor would not
assume the collective-bargaining Agreement.
A37
—The International Representative therewith called
his International Vice President and was told: 1) that a
majority of the plant’s employees would have to be hired
by Anchor if GMP was to be recognized as _ the
bargaining agent, and 2) that he should see to it that the
greatest possible number of the employees show up for
work on January 5.
—As the Company stresses, there is no evidence that
anyone on GMP'’s side ever undertook to urge Anchor to
view the assumption of the collective-bargaining
Agreement as an obligatory part of the purchase of the
plant. GMP treated Anchor, the Company is saying, as if
Anchor played no role in not assuming the Agreement.
—There was a 100-percent turnout by the plant's
employees on January 5. And, though as new employees,
all of them were hired by Anchor. In this sense, as the
plant operated as an O-I plant through January 4, there
was no loss of work by any of the plant’s employees.
Moreover, in becoming Anchor employees, they retained
the Agreement’s wage rates.
—Though it maintained the wage rates, Anchor
neither assumed the Agreement ror applied all of its
terms. To the contrary, in an announcement to the
employees on January 5, Anchor explicitly showed that
it was not assuming the Agreement and explicitly
identified the contractual areas in which the Agreement
terms were being eliminated. The following are excerpts
from the announcement and from the attachment to
which it refers. They are quoted to demonstrate that the
case cannot possibly be treated as involving either full or
substantial continuity of contractual benefits. The
announcement itself had this:
The
A38
“As your prospective employer, we offer
employment to each and every one of you in
accordance with this notice and the attached
summary of changes. While we have chosen not to
adopt the collective bargaining agreements between
Owens-Illinois and the Glass, Molders, Pottery,
Plastics & Allied Workers International Union, we
will apply the working conditions set forth in those
agreements (the Union-Shop Contract and the Local
Union-Management Agreement) as modified by the
changes described in detail in the attachment.
Please read the attachment carefully. We would like
you to note that all current wage rates are being
continued and, other than slightly increased
insurance premium contributions, no_ significant
changes are being made in your basic fringe
benefits.
You may indicate your acceptance of the
Company's offer of employment by continuing to
report for work in accordance with your previously
established schedule. Within the next few days,
after we have hired a substantial and representative
complement of employees, we will be able to
determine whether the law permits us to recognize
and bargain with the’ union. As soon es the law
allows, we intend to commence negotiations with the
union over the terms of an initial labor agreement.
Naturally, during those negotiations, all terms and
conditions of employment will be subject to
bargaining.
attachment included the following:
“Side Agreements, Letters and Practices—Are
not binding on the Company.
* * * *
Layoff Notice—All requirements of advance
notice for layoff, including but not limited to those
set forth in Article 3 of Owens-Illinois’ Union Shop
Contract, are eliminated.
x* * %* *
A39
Subcontracting—All_ restrictions against the
Company's management right to sub-contract,
including but not limited to any restriction set forth
in Article 30 of Owens-Illinois’ Union Shop
Contract, are eliminated.
Article 28 of Owens-Illinois’ Union Shop
Contract—All transfer, notice and other rights set
forth in this Article are eliminated.
Special Call Assignments—Any and _e all
restrictions against the work that may be performed
by employees summoned to work under a special cali
... are eliminated.
Filling of Vacancies—Any and all restrictions
against the Company’s mangement rights to fill
vacancies ... are eliminated.
* * %* *
Successors, Transferrees and Assignees—All
restrictions against the Company's management
rights to sell or transfer the plant, including but not
limited to those set forth in Article 33 of Owens-
Illinois’ Union Shop Contract, are eliminated.
Cost of Living Allowances—including but not
limited to all terms and conditions set forth in
Article 38 of Owens-Illinois’ Union Shop Contract,
are eliminated.
Personal Days Off—Are eliminated.
* %* %* *
Severance Pay—All rights to severance pay,
including but not limited to all rights set forth in
Article 31 of Owens-Illinois’ Union Shop Contract,
are eliminated.” -
—Anchor in due course recognized GMP as the
bargaining agent for the plant’s employees, and these
two parties therewith entered into negotiations for a new
Agreement. The negotiations resulted in the adoption of
a 3-year Agreement commencing on April 1, 1989.
SS
A40
—Several things are to be noted about the Asset
Purchase Agreement between O-I and Anchor. One is
that the Asset Purchase Agreement, quite in line with
what in fact happened, clearly contemplated that the
plant would continue to be operated. For example,
though Anchor was not obligated to hire or otherwise
offer employment to any of the plant's employees, O-I as
obligated: 1) to encourage them to accept employment
with Anchor, and 2) to refrain from hiring any of them
for any of its own operations for 180 days. Another is
that the Asset Purchase Agreement repeatedly makes
reference to “‘Closing’’. I accept that this is a reference
to the consummation of the Asset Purchase Agreement,
not to the closing of the plant. Another is that the Asset
Purchase Agreement was. negotiated without
representation by O-I’s Labor Relations Department.
The role of that Department was confined to providing
the negotiators with a copy of the collective-bargaining
Agreement—a role which it in fact fulfilled. And _ still
another is that the Asset Purchase Agreement expressly
granted Anchor the right not to assume the collective-
bargaining Agreement. Specified at Section 13(b) was the
following:
“Employee Agreements. Including Collective
Bargaining Agreements. It is understood and agreed
that this Agreement does not obligate buyer to
assume any of Seller’s liablities or obligations under
any collective bargaining agreement or other
employment agreement, express or implied, relating
to persons employed by Seller, and that, even if
Buyer elects to assume Seller's rights and
prospective obligations under any such collective
bargaining agreement or other employment
agreement, in no event will Buyer assume any
liability or obligation arising out of any such
collective bargaining agreement or _ other
A41
employment agreement relating to any transaction,
event or activity occurring or condition or state of
facts existing at or prior to the time of the Closing.”
The following are the parties’ respective issue
statements. As can be seen, there are differences
between them. And, as will be seen, the differences are
reflective of what is being respectively contended as to
each of the issues. There is no question, however, that
there are three issues, each growing out of the sale of the
plant and each concerned with the proper application of a
particular Agreement provision. The affected Articles are
Articles 33, 31 and 19.
The issue statement provided by the Company is
this:
“1. Did the Company violate Article 33 of the labor
agreement when the Purchaser of the Glassboro
plant did not continue all the terms of the labor
agreement?
2. Did the Company violate Article 31 by not
paying severance pay when the plant was sold to
Anchor Hocking?
3. Did the Company violate Article 19, Section 17
by not implementing the special pension benefit
provisions upon the sale of the plant?”
The issue statement provided by the Union is this:
“1. Did Owens-Illinois violate the parties’ collective-
bargaining agreement by its refusal to grant severance
pay to Owens’ former employees, when Owens, on or
about January 5, 1989, terminated the employment of
employees in its Glassboro, New Jersey plant and sold
the plant to Anchor Hocking Packaging Co.?
A42
2. If so, what is the proper remedy?
3. Did Owens violate its collective bargaining
agreement with the Union, when it permanently
closed its Glassboro plant as an Owens facility upon
the sale of the facility to Anchor, and failed to
permit employees under age 55, with 30 or more
years of credited service to receive their full
pensions, at the time of the closing, in accordance
with Article 19, Section 17 of Owens’ collective
bargaining Agreement?
4. If so, what is the proper remedy?
5. Did Owens violate the contract between the
parties, by failing to make the assumption of its
collective bargaining agreement by the purchaser, a
condition of the sale of Owens’ Glassboro, New
Jersey plant?
6. If so, what is the proper remedy?
I first deal with the issue which is concerned with
Article 33 (Issue No. 1 under the Company's issue
statement and Issue No. 5 under the Union's issue
statement). The Article reads as follows:
“Successors, Transferees and Assignees
This Contract shall be binding upon the parties
hereto, their successors, transferees and assignees.
In the event the Company sells or transfers this
plant, this agreement shall remain in full force and
effect and be binding upon the purchaser or
transferee.’
The Company's position can be taken as granting
that these declarations Were not honored. The Company
contends, however, that there was no breach of any
obligations which it undertook under Article 33 and that
the Company is therefore not to be held liable for any
A43
Article 33 violation which may have occurred. I am
holding both that the Article was violated and that the
Company must be held accountable for the violation.
The Company's arguments may be summarized as
follows.
1. The language of Article 33 contains nothing by
way of an active duty to be performed by the Company
in the event of the sale of the plant. The language
neither says that the Company is to extract any sort of
commitment from the purchaser nor says that a
purchase agreement is to include any sort of clause
involving the collective-bargaining Agreement. It is not
to be denied that Article 33 purports to bind the
purchaser to the collective-bargaining Agreement. But
the Article is not one which requires the seller to
undertake an affirmative act in this regard. Rather, the
Article is properly read as a passive successorship clause
which frees the Company of liability if the purchaser falls
down on his obligation to be bound by the collective-
bargaining Agreement. Cited are a number of arbitration
decisions on the proposition that the seller, absent an
express command on this score, is not required to obtain
compliance of the purchaser's assumption duty under a
successor clause. Though it relies on more (about to be
shown), the Company thus submits that, alone by proper
regard for the language of Article 33, the Union is
erroneously asserting that the Company was obligated to
s.e¢ to it that Anchor would assume the collective-
bargaining Agreement.
2. The 1986 negotiations covering the Glassboro
plant support the argument concerning the passive
nature of the language of Article 33. Proposed by the
Union in those negotiations was the following
‘“Successorship Clause’:
A44
“The Agreement shall be binding upon the parties
hereto, their successors, administrators, executors
and assigns. In the event of the sale or lease by the
company, or in the event the company is taken over
or a portion of the company is taken over by sale,
lease agreement, receivorship or bankruptcy
proceedings, such operation shall continue to be
subject to the terms and conditions of this
Agreement for the life thereof. The employer shall
give notice of the existence of this Agreement to
any purchaser, leasee, assignee, etc. Such notice
shall be in writing with a copy to the union not later
than 60 days prior to the effective date of sale. The
employer shall advise the union of the willingness of
the purchaser, leasee, assignee, etc. to adopt this
Agreement, not later than 30 days prior to the
effective date of sale.
Non-compliance with this provision is subject to the
grievance procedure and/or may be pursued through
litigation notwithstanding the lack of exhaustion of
the grievance procedure. The remedy for such non-
compliance shall include all damages and/or losses
sustained as a result of such failure to give notice
and/or such failure to require assumption of the
terms of this Agreement.”
This was language which not only specified active
Company duties but which also expressly rendered the
Company liable in the event of its failure to require
assumption of the collective-bargaining Agreement. The
proposal, however, was rejected; and Article 33 was re-
adopted without change. The _ significance is
obvious—and was respected in a cited arbitration
decision involving comparable language and comparable
unsuccessful efforts for changes in the language. Were
the arbitrator, here, nonetheless to impose Company
liability, he would exceed his authority under Article 9,
A45
Section 5 (“The arbitrator shall have no power to add to,
subtract from, or modify the terms of this Contract
a
3. Similarly revealing is what happened in the 1989
O-I-GMP negotiations covering the Plastic Products
Plants. Until those negotiations, the successor language
under the Plastics Products Agreement was identical to
that contained in Article 33. The Union proposed, and
the Company ultimately accepted, the following addition:
‘and the Company agrees it will include in the purchase
agreement that this Contract is binding on the purchaser
or transferee.’ The fact that the addition was sought
obviously serves to show that the requirement did not
exist under the former language. The Union is here
proceeding as if the addition or its equivalence had been
incorporated into Article 33 of the present Agreement.
Instead, however, the arbitrator must apply the language
which in fact is before him.
4. The Company's position is in tune with federal
labor law on successorship. As formed by NLRB and
court decisions, the successorship doctrine requires the
purchaser to bargain with the employees’ bargaining
agent where a majority of the purchaser's workforce are
employees who were in the seller's workforce—quite as
the Union understood in urging that all the employees
show up for work on the first day of the operation of the
plant as an Anchor plant and quite as the required
bargaining then took place. But the federal successorship
doctrine seeks to preserve bargaining freedom and thus
does not require the carryover of the seller's collective-
bargaining Agreement.
5. The Union stayed on the sidelines and took no
steps by which to enforce Article 33 against Anchor.
There was no approach to Anchor by the Union in the
a
A46
several weeks in which the Union knew about the
upcoming sale; and, once the Anchor-GMP bargaining
had begun there was no insistence by the Union that
Anchor assume the O-I-GMP Agreement. In the light of
this inaction, the Union should not be heard in its effort
to impose liability on the Company.
Further, to the extent that the Union relies on
Section 13(b) (quoted above) of the Asset Purchase
Agreement as inconsistent with the requirement of
Article 33, the Union is begging the question which is
raised under Article 33—namely, whether the Company
was obligated to compel Anchor to assume the collective-
bargaining Agreement. For the given reasons, there was
no such obligation on the Company. And, though Section
13(b) manifestly states that Anchor is not required to
assume the collective-bargaining Agreement, the Section
does not constitute either a statement which absolves
Anchor from any responsibility it may have under
Article 33 or a statement which provides Anchor with a
defense against a Union claim that Anchor was obligated
to assume the collective-bargaining Agreement.
Let it first be observed that I consider myself free to
proceed without emcumbrance by the various court and
arbitration decisions introduced by one party or the
other. In bringing the decisions to my attention, the
parties lawyers have done what good lawyers do. And,
indeed, I have been exposed to instructive material. But
it is at once true: 1) that there is no uniformity in the
treatment of the points which the _ parties are
respectively seeking to establish; 2) that there is no case
of the same underlying facts and Agreement language
relative to the present case; and 3) that I am in any
event not bound by anything held in any of the
decisions. Various pieces of reasoning by others in other
A47
cases may play an influential role. But it is in the end
the particular arbitrator whom the parties have chosen
who is to decide the particular case which they have
submitted to him.
I am rejecting the Company's arguments for the
following reasons.
First, there simply cannot be any question that
Article 33 was breached. ‘‘This Contract’’ must obviously
be read as a reference to all its terms, including its
duration; it was to be binding on successors as well as
the signatory parties; and it was treated as no longer
binding with the arrival of the successor, about three
months short of its duration. So much for the first
sentence. The second sentence essentially echoes the first
sentence but is more particularized. It specifically
presupposes the selling or transferring of the plant, and
it states that, where this happens, the Agreement “‘shall
remain in full force and effect and be binding upon the
purchaser or transferee’. The selling of the plant is what
here took place; the sale was consummated about three
months prior the Agreement’s expiration; Anchor was
the purchaser; and the Agreement was not kept in full
force and effect and not treated as binding on Anchor. A
clearer disregard of a clear commitment is difficult to
imagine.
Second, the parties to the Agreement were the two
signatory parties—and no others. It must follow that the
Article-33 commitment is to be viewed as a commitment
by O-l1 to GMP—quite as in the case of seniority
regulations, shift differentials, holidays and vacations,
etc., etc. When the Company makes such commitments,
it presumably expects to live up to them. It is an intention
which does not bear saying—or, stated otherwise, it
would be an off-repeated refrain if it required saying.
_
A48
Granted that the Company, when it made the Article-33
commitment, did not know whether the plant would be
sold and, if so, who the purchaser might be and what
sort of demands he might make as requisite conditions
for purchasing the plant. But the commitment laid down
at Article 33 is not a-— conditional
commitment—conditioned upon the making of a
satisfactory sale or upon the finding of a purchaser who
might be pleased or readily willing to assume the
Agreement. It is a flat commitment, and it cannot be
taken to lose its force as a sale materializes—or as a sale
can be made to materialize only by acceding to a
potential purchaser's demand for the shedding of the
Agreement.
Third, while the just-given observations themselves
add up to a rejection of the passive-versus-active
distinction which the Company is urging, it is
additionally to be appreciated that this is not a case in
which the assumption or non-assumption of the
collective-bargaining Agreement is overlooked in the
negotiations for the sale of the plant or in which, indeed,
the purchaser allows the negotiations to go forward on
an undersiending that the collective-bargaining
Agreement wi'’ he kept in effect and then abandons it
upon acquiring the plant. The very opposite is what here
happened: a copy of the collective-bargaining Agreement
was asked for and obtained by the negotiators for the
sale of the plant, and it is obviously a fact (see the
January 5 Anchor announcement and its attachment)
that the negotiators were aware of Article 33. There is
thus no escaping the conclusion that the negotiators, in
adopting Section 13(b) of the Asset Purchase Agreement,
acted in plain defiance of Article 33. Anchor was
presumably the asking party as to Section 13(b). But O-I
was a partner in its adoption. And O-l, to repeat, had
A49
made the Article-33 commitment. I do not believe that
the ‘‘passive’’ theory is in the first place correct under
the language of Article 33. But I view it as not even
deserving of a sympathetic ear on the circumstances of
the present case.
Fourth, while | do not doubt the accuracy of the
Company's statement respecting the successorship
doctrine under federal labor law, I see no reason to hold
concern for it in deciding the case. At issue is the proper
interpretation and application of Article 33; Article 33
clearly does not say, and clearly cannot be construed as
saying, that the purchaser is to recognize the Union and
therewith engage in bargaining for a new Agreement;
and, as to the commitment which is made under Article
33, there is no contention that it is to be discarded, or
otherwise to be treated as unenforceable, for lack of
validity under the law.
Fifth, because the asserted import is similar, I join
the Company's arguments respecting the 1986
negotiations for the Glassboro Plant and the 1989
negotiations for the Plastic Products Plants. I am among
the many arbitrators who: 1) have sided with the
proposition that neither side ought to be permitted to
gain in arbitration what it failed to gain in negotiations,
or 2) have applied either an unsuccessful negotiating
proposal or a negotiating proposal which resulted in
additional or modified language as significant light-
shedding in the proper interpretation of the language
which was in effect at the time the proposal was made.
Here, however, I reject the Company’s reliance on these
precepts as misplaced. As to the 1986 negotiations for
the Glassboro Plant, the Union manifestly sought to go
well beyond what had been secured under Article 33. In
my opinion, the fact that the proposal for expanded
iii
A50
coverage included express provision for Company
liability is not properly applied as foreclosing Company
liability under the pre-existing and continued Article 33.
So to apply the proposal would be to say that the clause
as written did not contain the Company's responsibility
for the keeping of its promise and thus did not call for
Company liability. For the earlier-given reasons, I believe
that the contrary is true. And as to the 1989
negotiations for the Plastic Products Plants, while the
additional language does not expand upon the coverage
of Article 33 and, instead, is a mere implementing
requirement for the pre-existing coverage, I once more
decline to give it the import which the Company is
urgeng. It is significant that the additional language
came into being on the heels of the sale of the Glassboro
plant: the additional language, it is acknowledged, was
the response to the Company's failure in that sale to
require Anchor to assume the collective-bargaining
Agreement. And while the Company contends that ‘t
thought long and hard before it assented to the
additional language, I agree with the Union that the
_Company could not honorably have done less. Again
going back to what has earlier been observed, the
commitment of Article 33 was O-I's, and it was therefore
for O-I to see to it that the sale of the plant would be
conditioned on the purchaser's assumption of the
collective-bargaining Agreement. The additional language
which emerged from the Plastic Products negotiations is
to this effect. It merely makes express what, to me, was
embedded as a clear obligation.
Sixth, I dissent from the Company's argument
respecting the Union’s inaction toward Anchor in
connection with Anchor's’ non-assumption of the
Agreement. I see nothing in the language of Article 33,
in reason, or in traditional notions under collective-
Adl
bargaining relationships, by which the enforcement role
vis-a-vis Anchor can be taken to have been the Union's.
One must wonder, indeed, what the Union is supposed to
have done. The Union could clearly not have been a
rightful participant, or even a rightful observer, ‘a the
negotiations leading to the Asset Purchase Agreement.
And as to the post-sale collective-bargaining negotiations
between Anchor and the Union, the Company is in effect
saying that the Union, rather than do the best it could
by sober measuring of negotiating realities, should have
insisted—presumably by striking, if necessary—on the
resurrection of the O-I-GMP Agreement. I do not believe
that the Union was obligated, as a condition of being
heard in this forum on the fulfillment of O-I’s promise
under Article 33, to push Anchor for the rescission of its
January 5 announcement and attachment. | believe,
rather, that the Company is making an argument which
is to be rejected as adding up to plain burden-switching.
Seventh and last, though it may add up to
reiteration, I want explicitly to deal with the suggestion
the Company is making that Anchor should be treated as
the party which is liable. The Company suggests this by
arguing that Section 13(b) of the Asset Purchase
Agreement, while it rendered Anchor free not to assume
the collective-bargaining Agreement, did not absolve
Anchor from its responsibility under Article 33 and does
not constitute the basis of a defense for Anchor in a
claim that Anchor violated its obligation under Article
33. Though true that ‘‘be binding upon the purchaser’”’ is
part of the language of Article 33 and though true that
Anchor, having been aware of the language of Article 33,
could no more properly have entered into the terms of
Section 13(b) than the Company, I view the Company as
once more engaged in burden-switching. In the first
place, as previously pointed up, the pledge under Article
A52
33 was made by the Company. The pledge cannot be
viewed as ceasing to be the Company's burden where it
is broken, not after the plant becomes the purchaser's
and after the Company has made the sale in the good-
faith belief that the collective-bargaining Agreement
would be assumed by the purchaser, but before the
consummation of the sale and with the Company's
participation. And in the-second place, ownership of the
plant and control over its destiny lay with the Company,
not Anchor. The Company was free to continue to
operate the plant, to sell it, or to shut it down. But each
of these courses had the contractual consequence which
the Company and the Union had agreed to. What the
Company was not free to do was to go with one or
another of these courses without observance of the
particular course's contractual consequence. And this is
precisely what the Company here did. Rather than
simply say ‘no’ to Anchor in observance of the Article-
33 pledge, the Company permitted Anchor to purchase
the plant on the stipulation that Anchor would not be
bound by the Agreement. Having itself been the
facilitator of the violation of Article 33, the Company
cannot legitimately argue that it should’ escape
liability—at least not vis-a-vis the Union's claim against
the Company. There is no evidence that the Company, in
agreeing to the terms of Section 13(b), gave Anchor to
understand that the liability would be Anchor's if Article
33 were to be found to have been violated. But if this or
something like it happened, the burden for collecting on
it would be the Company’s, not the Union's.
Raised by the foregoing is the remedy question.
Neither party has addressed it. The Union merely raises
it as a question, and the Company confines itself to the
A53
given denial of Company liability. As is true of any other
remedy question, the technically correct answer is to
undo what has wrongfully taken place. Here, however,
this would mean: the voiding of the sale as an improper
act under Article 33, the retroactive application of the O-
I-GMP Agreement through its expiration date with
whatever make-whole consequences might be involved,
and the retroactive negotiation of a new O-I-GMP
Agreement, with the former O-I-GMP Agreement as the
base from which the parties would have negotiated for ©
the new Agreement, with whatever make-whole
consequences this would entail if it is assumed that
wages and benefits would have been increased under the
new Agreement, and with recognition of the possibility
that there might have been no new Agreement by virtue
of a prolonged deadlock between the parties. It would be
an exercise of enormous difficulties, raising an endless
array of elusive questions and likely throwing the parties
into protracted and costly litigation. Neither party has
asked for the unscrambling, and I am not disposed
independently to impose it.
Rather, I will treat the other two issues in the case
as linked with the violation of Article 33 and, in the light
of the holdings I am making on them, as disposing of the
remedy question under Article 33. On the one hand, as
will be seen, those two issues simply could not have
arisen if the Agreement had remained in effect while the
plant continued to operate (under either O-I or Anchor
auspices). And, on the other hand, the Union brought
those two issues—and no others—in conjunction with the
Articie-33 issue. This being so, and there otherwise being
nothing by way of a remedial suggestion respecting the
Article-33 issue, the Union is properly held to what it is
asking for on those two issues. Else, contrary to the
A54
widely accepted finality precept in the arbitral forum, the
Union would be permitted to have a second bite at the
apple.
The next issue to be dealt with concerns Article 31
(Issue No. 2 under the Company's issue statement and
Issue No. 1 under the Union's issue statement). Article
31 is titled ‘‘Severance Pay’ and is composed of three
paragraphs. The last two paragraphs need not be quoted.
The first paragraph reads as follows:
“If the Company elects to permanently close the
Glassboro Plant or a department, severance shall be
paid on the basis of 25 hours per credited year of
service with a maximum of 750 hours payable.’
The parties’ respective positions recognize
‘‘permanently close” as the key phrase.
The Union submits: that the Company permanently
ceased to operate the plant; that all of the plant’s hourly
employees were permanently separated from O-]
employment; that they had no right to be employed by
Anchor; that, in going to work as Anchor employees,
they lost their Agreement rights and suffered substantial
losses in benefits; that severance pay was among those
losses—for, under the new Anchor-GMP Agreement,
there is no severance-pay provision; that the plant
operated as an O-I plant for many years and thus had
employees of many years of loyal O-I service; that, as is
true of any other fringe benefit, a severance-pay
provision is obtained at the price of foregoing a wage
increase or part of it—so that the wage rates which were
in place at the time of the employees’ separation from O-
I employment and which were adopted by Anchor were
lower than they would have been had the severance-pay
aa
A55
provision not been negotiated; and that, by proper
appreciation of all of these considerations, the
Company's resistance to the payment of the Article-31
severance pay is ill-founded and should be overruled.
Contrarily, the Company submits: that the Union is
making a series of strained contentions in seeking to
overcome the fact that the triggering event explicitly
laid down at Article 31 is “permanently close’; that
there was no closing of the plant—not even for a minute
and not even with any sort of departure from normal
operations; that all of the employees remained in plant
employment; that they continued to be represented by
the GMP, which soon negotiated a new Agreement for
them; that the Union's reliance on employment
termination is therefore fallacious in two ways: 1) neither
termination nor layoff nor any other form of separation
from employment is the specified criterion under Article
31, and 2) even that which traditionally is thought to
justify severance pay—a tiding-over means for an
individual who has lost employment and is seeking new
employment—did not take place; that, likewise, the sale
of the plant is not an event which makes Article 31
operative; that the language of Article 31 covers both
the plant as a whole and a department thereof and that
the Company recognized and implemented its obligation
under Article 31 when, in 1988, the plant’s can-lid
department was shut down; that the Company's
resistance to the payment of severance pay in the
present case is consistent with a series of other instances
involving other Company plants or divisions: 1) the
Millville Sand Plant, which was closed prior to its sale
(thereby warranting the payment of severance pay), 2)
several Glass Container Division plants, which were
closed (thereby warranting the payment of severance
pay), 3) the Forest Products Division, which was sold but
A56
not closed (thereby not warranting the payment of
severance pay); and that it follows from all of the above
that the Union is seeking a monumental windfall and is
making a claim which should be rejected as lacking in
merit.
Two things are to be granted. One is that, as already
noted, the severance-pay provision could not possibly
have become operative, with or without the sale of the
plant and whether the operation of the plant would have
been O-I’s or Anchor's, had the Agreement been kept in
effect. The employees’ protection against a change in
ownership during the life of the Agreement lay in Article
33, not Article 31. The other is that, by common
understanding of the term, the plant was _ not
permanently closed. What is commonly envisaged when
that term is used is a plant which loses its viability,
ceases its operation, and dismisses its workforce without
expectation of ever again engaging it. The idea of
severance pay, quite as its name suggests and quite as
the Company argues, is to cushion the likely impact of
such displacement. It may also be viewed as a reward for
past service in the face of loss of employment. Here,
both the plant and its operations stayed intact and there
was no cessation—indeed, not even an interruption—in
employment. And if it is granted—as it must—that the
plant was not permanently closed within the usual
meaning of the term, it must also be granted (in the
absence of evidence respecting the negotiating
discussions) that the plant was not permanently closed
as the parties intended the term to be applied when they
adopted Article 31.
But I do not believe that the inquiry can properly be
made to end with the recognition that what here
occurred was a sale rather than a permanent closing—or
A57
with the further recognition that these are events which
were treated as lying in contradistinction to each other
under the parties’ Agreement (namely, at Article 33 with
one consequence and at Article 31 with another and very
different consequence). For, if the inquiry were so ended,
one would be overlooking the fact that the Company
failed to respect the consequence which the Agreement
prescribes for a sale—or, stated otherwise, that the sale
was no more a sale within the meaning of the Agreement
than the plant was permanently closed within the
meaning of the Agreement. This is the real state of
affairs in the case, and it is manifestly to be dealt with.
As indicated, I have determined that the severance
pay called for by Article 31 is properly applied in
rectification of the violation of Article 33. The following
are the reasons.
First, as shown above, the application of the
technically correct remedy would lead to a morass
approaching impossibility and, judging by the parties’
respective stances in the case, is not sought by either
party. Specifically to be said, aside from what has
already been said, is that the Company has not argued
that the Article-31 rectification route may not properly
be taken even if the Company were found to be liable for
the violation of Article 33.
Second, the violation of Article 33 was an act which
in effect abandoned the employees. There was immediate
re-employment and thus less of the proximate impact
than is likely to occur when an individual has to look
elsewhere for employment upon the permanent closing of
the plant at which he or she has been employed. But, in
overall impact, the loss was severe and_ involved
hardships which are not dissimilar to the hardships
AD5&
which Article-31 is designed to cushion. Rather than
remain in employment with every Agreement right kept
intact, the employees: were permanently dismissed from
O-lL employment, had no right to be employed by Anchor,
went to work under Anchor's unilaterally established
terms, and ended up (judging by what evidence there is
respecting the new Anchor-GMP Agreement) faring
substantially worse than they would have fared had their
rights under Article 33 been observed.
Third, 1 reject) the Company's — windfall
characterization as one-sided and as thereby — not
standing up. | in no way mean to minimize the sum of
money which is involved in severance pay under Article
31. It is a substantial sum—by my calculations of the
tabulations contained in Union Exhibit 9, the average
per-employee payment will be about $5,500 and the sum
for the workforce as a whole will be about $2 million. But
what is equally to be appreciated is that Anchor
presumably insisted on Section 13(b) (or its equivalence)
because it saw the non-assumption of the collective-
bargaining Agreement as being of monetary value to it
and that O-l’s assent to the adoption of Section 13(b)
was of influence, favorable to O-1, in arriving at the sum
to be paid for the purchase of the plant. I am not saying
that O-l’s gain was in the amount of $2 million or is
otherwise quantifiable in any sort of exact terms. But |
think it is correctly assumed that Article 33 would have
been honored as a matter of course had the honoring
been painless for Anchor and that O-I's gain flowing
from its assent to the adoption of Section 13¢b)
was therefore more than minimal. In relation to the
purchase price, it is to be observed, $2 million represents
about 5!» percent. And when this is put alongside the
above-discussed losses sustained by the employees, |
believe that the windfall argument loses its force.
The last issue (Issue No. 3 under each party s issue
statement) requires but brief treatment. Section 17 of
Article 19 calls for a special pension-retirement benefit
for employees in’ a certain age-service category “when
the Company elects to close a plant permanently”. |
refrain from identifying the benefit in more precise terms
because, owing to the potential juxtaposition as between
the Article's Section 5 and Section 17, there may be a
dispute between the parties as to the covered benefit
under Section 17. There may also be a dispute between
the parties on the Union's assertion that the covered
employees would have been treated as eligible for retiree
medical benefits. But these are refinements which need
not here be addressed. The question which is posed is the
interpretative question arising from the just-quoted
language in Section 17. To be noted, however, is that the
present issue involves but a handful of
employees— apparently fewer than ten.
The just-quoted language constitutes the triggering
language. It is not identical to the triggering language
laid down at Article 31 but it is obviously of the same
import. Neither party contends otherwise. Together with
all the observations and conclusions contained in the
discussion of the severance-pay issue, | make the same
disposition.
A60
DECISION
The grievance is disposed of as given in the
accompanying Opinion. If implementing difficulties
develop and cannot be resolved through consultation
between the parties, either party is free to return the
case to me for final resolution.
s) Rour VALTIN
Rolf Valtin
Arbitrator
Dated: July 3, 1990
A6l
ORDER OF THE UNITED STATES COURT
OF APPEALS FOR THE THIRD CIRCUIT
DENYING PETITION FOR REHEARING
(Dated August 15, 1991)
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 91-5159
GLASS, MOLDERS, POTTERY, AND ALLIED
WORKERS INTERNATIONAL UNION; AFL-CIO;
LOCAL UNION 44
Vv.
OWENS-ILLINOIS, INC.;
OWENS-ILLINOIS, INC;
counter-claimant
Vv.
GLASS, MOLDERS, POTTERY, AND ALLIED
WORKERS INTERNATIONAL UNION; AFL-CIO;
LOCAL UNION #4
counter-defendant
OWENS-ILLINOIS, INC.
Vv.
GLASS, MOLDERS, POTTERY, AND ALLIED
WORKERS INTERNATIONAL UNION;
AFL-CIO, CLC
Owen-Illinois, Inc., Appellant
A62
Appeal from the United States District
Court for the District of New Jersey
(Civil Action Nos. 90-03236 and 90-03291)
PRESENT: Stoviter, Chief Judge, GREENBERG and
SEITZ, Circuit Judges.
ORDER
The petition for panel rehearing, filed by appellant in
the above captioned matter, having been considered by
the judges who participated in the decision of this court,
is hereby denied.
By the Court,
Ss) SEITZ
Circuit Judge
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