Opposition Brief — International Union of Elevator Constructors v. National Elevator Industry, Inc.

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In The JUN 12 1985

Supreme Court of the United States °°

—~

October Term, 1984

INTERNATIONAL UNION OF ELEVATOR

CONSTRUCTORS, AFL-CIO,

Petitioner,

VS.

NATIONAL ELEVATOR INDUSTRY, INC.,

Respondent.

BRIEF IN OPPOSITION TO THE PETITION FOR WRIT OF

CERTIORARI TO fHE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

CHARLES O. STRAHLEY

Counsel of Record

PUTNEY, TWOMBLY, HALL &

HIRSON

Attorneys for Respondent

250 Park Avenue

New York, New York 10177

(212) 661-8700

COUNTER STATEMENT OF QUESTION PRESENTED

Whether the District Court and Court of Appeals erred in

holding that an arbitrator’s interpretation of a wage formula drew

its essence from the collective bargaining agreement where the

arbitrator found that the language of the collective bargaining

agreement did not clearly or definitively resolve a dispute relating

to a wage formula and relied upon evidence of the history of

bargaining to ascertain the intent of the employer and the union

in negotiating the wage formula.

il

TABLE OF CONTENTS

Page

Counter Statement of Question Presented............... i

PD Bt PPT ee ep er ee il

Feee OT CRO. ii oe on dccs ied d eee iv

Counter Stagumment Of the FOGhG. 6.6.0.60 66s ckes caving bene ss 1

1. Parties and History of Collective Bargaining ..... |

2. The Affentic City PORE . cc:scacacesegaousnes 2

3. Reductions in Wage Rates in Cedar Rapids in 1983

ob 00 n6040.6:040 400d ee Ae a 3

4. Positions of the Parties at the Arbitration Level.. 4

5. Events Leading Up to 1967 Negotiations......... 5

6. Proposed Solutions by Parties in the 1967 Negotiations

o 20806 60 ou 06k a5 wom ee noe en 6

7. Summary and Analysis of Arbitrator Goldberg’s

PESTO re eres er A 7

Argument:

I. The District Court and Court of Appeals correctly

applied the appropriate legal standard............ 14

ii

Contents

Page

Il. The decision of the Court of Appeals for the Second

Circuit is not in conflict with the decision of any other

TE aS Larkin nls VA de 6 0g R GOS Os Rk ONE 18

ara esa od beso Ale ah 22

iv

TABLE OF CITATIONS

Cases Cited: Page

Clinchfield Coal Company v. District 28, United Mine Workers

of America, 720 F.2d 1365 (4th Cir. 1983) ......... 21

Detroit Coil Company v. International Association of

Machinists and Aerospace Workers, Lodge 82, 594 F.2d

575 (6th Cir. 1979), cert. denied, 444 U.S. 840 (1979)

dh ieee naan e awe cei ie ce ae ees 21

H.K. Porter Company Inc. v. United Saw, File and Steel

Products Workers of America, 333 F.2d 596 (3rd Cir.

SN hd OY CMM EN ob 1 eee oa OW are caked eUeeew ck i9

Milwaukee Typographical Union No. 23 v. Newspapers, Inc.,

639 F.2d 386 (7th Cir. 1981), cert. denied, 454 U.S. 838

DN Seca Ta ks a ae bk pa Deo faba dil Bee oe wed tsda os 20

Pacific Motor Trucking Co. v. Automotive Machinists Union,

poe Be 2 El Ae, rae ere 22

Textile Workers Union No. 1386 v. American Thread Co.,

Cog FE ee) rr rrr er 21

Timken Company v. Local Union No. 1123, United

Steelworkers of America, 482 F.2d 1012 (6th Cir. 1973)

iithc sdk b cea k ORS ale Uae o Rien hee ee ea eN eR ee Es 19, 20

United Steelworkers of America v. Enterprise Wheel & Car

ee ae ere 14, 15, 16, 19

No.

In The

Supreme Court of the United States

a

' October Term, 1984

INTERNATIONAL UNION OF ELEVATOR

CONSTRUCTORS, AFL-CIO,

Petitioner,

VS.

NATIONAL ELEVATOR INDUSTRY, INC.,

Respondent.

On Petition for a Writ of Certiorari to the United States Court

of Appeals for the Second Circuit

BRIEF IN OPPOSITION

COUNTER STATEMENT OF THE FAcTS —

1. Parties and History of Collective Bargaining

National Elevator Industry, Inc. (“‘NEII’’) is a multi-employer

trade association which represents employers engaged in the

elevator business. The International Union of Elevator

Constructors (‘‘IUEC’’) is an international union representing

elevator mechanics and helpers employed by elevator companies

throughout the United States. There is a long history of collective

bargaining between NEII and the IUEC. The collective bargaining

agreement is known as the ‘“‘Standard Agreement’’ in that it covers

the wages, hours and working conditions of elevator mechanics

and helpers on a nationwide basis.

2. The Atlantic City Formula

Although the Standard Agreement applies on a nationwide

basis, the wage rates paid to mechanics and helpers vary from

one geographic area to another.

In 1921, the parties agreed upon a wage formula which has

come to be known as the ‘‘Atlantic City formula’’. Although

details of the Atlantic City formula have changed from time to

ime, the basic concept since 1921 has always been the same,

namely, that the wage rate paid to the elevator constructor is based

upon the wage rates of the other building trades in the geographic

area in which the elevator constructor works.

Under the Standard Agreement, the wage formula is

calculated separately for each geographic area covered by the

»). EC’s local unions. Over the last several years there have been

approximately 98 wage changes calculated under the Atlantic City

formula each year. The calculations have been routinely made

by the NEII staff in New York City, which then sends written

notification of the amount and effective date of the new wage

rate to the IUEC, the IVEC local union and the individual

employers that are engaged in business in the geographic area

for which the wage rate is applicabie.

3. Reductions in Wage Rates in Cedar Rapids in 1983

In response to the competition from non-union shops in the

Cedar Rapids area, the building trades unions in Cedar Rapids

agreed to accept substantial wage rate reductions in the spring

of 1983, as follows:

FRINGE

WAGES BENEFITS TOTAL

Iron Workers: $2.85 per hour $.06 per hour $2.79 total

reduction increase reduction

Carpenters: $2.85 per hour $.05 per hour $2.80 total

reduction increase reduction

Sheetmetal

Workers: $3.08 per hour $.50 per hour $2.58 total

reduction increase reduction

Bricklayers: $1.50 per hour §$.02 per hour $1.48 total

reduction increase reduction

Electricians: $2.62 per hour No Change $2.62 total

reduction reduction

Plumbers: $2.80 per hour $.40 per hour $2.40 total

reduction increase reduction

Plasterers: $2.35 per hour No Change $2.35 total

reduction reduction

Applying the Atlantic City formula to the Cedar Rapids area,

NEII determined that the wage rate for the elevator constructors

in the Cedar Rapids area should be $12.54 per hour. This was

a reduction of $2.54 per hour from the prior wage rate for an

elevator mechanic in Cedar Rapids.

On August 1, 1983, NEII gave written notice of NEII’s desire

to change the wage rate in Cedar Rapids. The parties met to discuss

the proposed change on August 10. At this meeting the IUEC

did not deny that the other building trades in Cedar Rapids had

in fact agreed to wage rate reductions. However, the IUEC took

the position that under the Atlantic City formula no reduction

. was permissible other than a 31-cent reduction for fringe benefits.

The IVEC then sought to obtain an injunction barring

implementation of the wage rate change in the District Court.

After the injunction was denied, the change was implemented on

August 31, 1983.

4. Positions of the Parties at the Arbitration Level ,

At the arbitration level, the JUEC acknowleged that the

Atlantic City formula as written in 1921 permitted either increases

or decreases in the wage rates of an elevator constructor, depending

upon whether the average wage rates of the other building trades

rose or fell. The IUEC argued, however, that there was a

modification of the Atlantic City formula in 1967, by which

modification the wage rate of the elevator constructor became

a guaranteed wage rate not subject to reduction even if the other

building trades in the same locality agreed to accept wage rate

reductions.

NEII agreed with the [UEC that the Atlantic City formula

as Originally written permitted either increases or decreases in the

wage rate and also agreed that the Atlantic City formula was

modified in 1967. However, NEII flatly denied that the parties

ever agreed that the Atlantic City formula was modified sc that

it became a formula by which the elevator constructors only uscd

the average of wage rates for other trades if that average went

up but did not use the average if the average went down. NEII

took the position that during protracted negotiations over a period

of six months in 1967, including a seven-week strike, this concept

was never discussed by the parties. NEII took the position that

in 1967 the parties modified the Atlantic City formula for only

one reason:

to establish a method of accounting for the cost

of fringe benefits under the formula.

5. Events Leading Up to 1967 Negotiations

As shown above, the issue in the arbitration turned upon

the intent of the parties in modifying the Atlantic City formula

in 1967.

Up until the early 1950’s, most building trades locals

throughout the United States negotiated collective bargaining

agreements under which all or virtually all of the total

compensation paid to the tradesmen was paid in the form of wages.

Prior to the 1950’s, the collective bargaining agreements in the

building trades generally did not provide for so-called ‘‘fringe

benefits’’ such as pension, health and welfare, paid vacations and

paid holidays.

Beginning sometime in the 1950’s the various building trades

locals began to negotiate provisions for fringe benefits in their

collective bargaining agreements. As more and more of the building

trades locals began to include fringe benefits in their collective

bargaining agreements, questions arose as to the proper method

of accounting for the cost of fringe benefits under the Atlantic

Citv formula.

In 1964, 1965 and 1966, there were several different arbitration

awards dealing with questions concerning the proper accounting

of fringe benefits under the Atlantic City formula. In 1964,

Arbitrator Peter Seitz held in two lengthy opinions that the cost

of vacation and welfare benefits which have been deducted from

the negotiated wage rate of a building trades local should be

included in the local’s wage rate for the purpose of the Atlantic

City formula. In 1965, Arbitrator Ronald Haughton held that

the cost of vacation and holidays which are established

independently of the wage rate of a building trades local should

be excluded from the local’s wage rate for the purpose of the

Atlantic City formula. In 1966, Arbitrator Nathan Cayton held

that the cost of pension benefits which are deducted from the

negotiated wage rate of a building trades local should be included

in the wage rate of the building trades local for the purpose of

the Atlantic City formula.

These four arbitration awards did not resolve the problems

of accounting for fringe benefits to the complete satisfaction of

either-the IUEC or NEII for several reasons. First, the situation

as to each building trades local was transitory. A particular local

could be considered a ‘‘Seitz’’, ‘‘Haughton’’ or ‘‘Cayton’’ type

of local with respect to one type of fringe benefit in one year

and then change its category in the next year by rewording its

collective bargaining agreement. This created serious administrative

problems and also created the possibility of results which could

be regarded as inequitable by the employers or the employees.

Second, the IUEC took the position that a change in the Atlantic

City formula was necessary to keep the elevator constructors from

falling behind the other building trades because of the fact that

these other trades had begun to allocate a greater proportion of

their total compensation package to fringe benefits.

6. Proposed Solutions by Parties in the 1967 Negotiations

In the 1967 negotiations, the IUEC and NEII took entirely

different approaches to the fringe benefit question. Finally, after

a seven-week strike, the parties reached agreement upon a

compromise. First, the formula adopted the reasoning of the Seitz,

Haughton and Cayton arbitration awards but made an important

addition to these awards by providing that monies considered to

be part of the wage rate of a particular local under the Seitz and

Cayton decisions would continue to be so considered despite any

rewording of the collective bargaining agreement by that local,

and that monies considered to be a fringe payment under the

Haughton decision would continue to be so considered despite

such rewording.

Next, the formula itself was recast into eight steps to

separately compute (a) the wage rates of the Atlantic City trades

and (b) the increases in fringe benefits for those trades.

There were several other changes in the wage formula, the

details of which are beyond the scope of this brief. In summary,

all of these additional changes dealt with the establishment of

a method of accounting for the cost of fringe benefits.

7. Summary and Analysis of Arbitrator Goldberg’s Opinion

Arbitrator Goldberg expressly held that ‘‘regardless of how

substantial the burden of proof that is placed on the Employers,

they have sustained that burden.’’ However, like many other

arbitrators, in his opinion Arbitrator Goldberg concentrated on

expressing his reasons for rejecting the IUEC’s contentions.

Inasmuch as Arbitrator Goldberg’s opinion is reprinted in its

entirety in the Appendix to the IUEC’s petition for certiorari,

it is unneccessary to repeat herein Arbitrator Goldberg’s responses

to the IUEC’s arguments. However, there was substantial evidence

before Arbitrator Goldberg which affirmatively supported NEII’s

position which Arbitrator Goldberg passed over lightly in his

opinion or did not mention at all. This evidence may be

summarized as follows:

A. Analysis of the revision of the wage formula shows that

each and every substantive change in 1967 was a change relating

to the method of separately accounting for the cost of fringe

benefits.

B. NEII precisely followed all of the mathematical steps of

the wage formula in reaching the mathematical result that the

new wage rate for the mechanics in Cedar Rapids should be $12.54

per hour. The IUEC’s argument that $12.54 is not the correct

hourly wage rate is a purely semantic argument in which the IUEC

takes the word ‘‘increase’’ out of context and attempts to make

one word in a complicated formula paramount to the remainder

of the formula. Putting the IUEC’s argument in its best light,

the use of the word ‘“‘increase”’, in context with the rest of the

wage formula, would arguably create an ambiguity in the wage

formula.

Arbitrator Goldberg correctly recognized that the wage

formula itself does not clearly and unambiguously support the

IUEC’s contention and thus he examined the other evidence of

the intent of the parties. His careful examination of all of such

evidence showed that NEII had sustained any burden of proof

which might be placed upon it.

The [UEC virtually ignores a transcript of 196 pages and

21 employer exhibits which demonstrate beyond cavil what the

IUEC itself understood the contract to be in 1967. The IUEC

entirely ignores the 46-year bargaining history which preceded the

collective bargaining negotiations in 1967. The IUEC ignores

several other arbitration cases which support NEII’s position. In

essence, the IUEC makes the same narrow semantic argument

to this Court which the Arbitrator, the District Court and the

Court of Appeals rejected on the basis of the record as a whole.

C. The IUEC’s contemporaneous statements of its bargaining

objectives in 1967 support NEII’s position. Arbitrator Goldberg’s

opinion quotes from the explanation which the IUEC gave to

its members after the negotiations were concluded. In addition,

during the seven-week strike, the [UEC published letters addressed

“To the Contract Service Customers of Struck Elevator

Companies.’’ The first two paragraphs of these letters state as

follows:

**To the Contract Service Customers of Struck

Elevator Companies

* * *

You are entitled to know the truth about our strike

and our wage demands. Every local of the Elevator

Constructors has, since 1921, determined the wage

rate of its members by a formula of averaging the

wage rate of five highest of seven building trades

unions in their areas. The seven unions are: Brick-

layers, Ironworkers, Electricians, Plumbers, and —

Steamfitters, Plasterers, Carpenters, and Sheet

Metal Workers. With the development of fringe

benefits both NEMI and the Elevator Constructors

have recognized that a new formula must be

developed. Our dispute is over what it should be.

We want to use the same formula but average

increases in total compensation. We can assure you

that such a formula will only keep the Elevator

Constructors on a par with similar building trades

unions.’” (Emphasis supplied.)

The letter clearly says:

1. That both IUEC and NEII recognized that it was necessary

to develop a new formula because of ‘‘the development of fringe

benefits.’’

10

2. That IUEC wanted ‘‘to use the same formula but average

increases in total compensation.”’

3. That the formula desired by the IUEC would ‘‘only’’ keep

the elevator constructors ‘‘on a par’’ with similar building trades

unions.

The IUEC wanted to use ‘‘the same formula’? — which the

IUEC concedes * its letter was an ‘‘averaging’’ formula. The

effect of incluu.ng fringe benefits in the calculations would,

according to the IUEC, ‘‘only’’ keep the elevator constructors

‘fon a par’’ with similar building trades unions.

The phrase ‘‘on a par’’ cannot reasonably be construed as

giving the elevator constructors guaranteed wage rates not subject

to reduction even if, as in Cedar Rapids, the wage rates of similar

building trades suffered substantial reductions.

D. Part of the evidence before Arbitrator Goldberg was a

prior arbitration award in which the IUEC took a position which

is inconsistent with the position taken by the IUEC in the instant

case. As recently as April 2, 1982, Arbitrator Sylvester Garrett

issued an opinion and award dealing with the issue of whether

‘“*travel pay’’ paid to other building trades unions should be

included as part of the wage rate of the other building trades

unions for the purpose of the Atlantic City formula. Arbitrator

Garrett’s findings, as we!l as much of the IUEC’s arguments in

that case, support NEII’s position in the instant case.

Thus, Arbitrator Garrett described the IUVEC’s contentions

in the case as follows:

**The history of the Article V wage formula, first

adopted in 1921, is cited to support this conclusion.

Originally, the term ‘wage rate’ did not require

11

any definition since virtually all building trades

employees in 1921 were paid a single hourly wage

which constituted all of their compensation for

services rendered. Thus, the intent of the parties

in 1921 clearly was to have the total compensation

of the Elevator Constructors determined by

averaging the total compensation of the other top

trades.’”’

**This basic intent has remained the same over the

years in the Union view, even though the parties

have had to modify the wage formula in response

to innovations in the constructicn industry. Thus,

in 1967 the formula was modified to take into

account the indirect form of compensation known

as fringe benefits. The fringe increases of other

crafts now are computed separately from their

wage rate increases and both are plugged into the

formula at a different step (Article V, Steps 2-4).’’

‘In short, Article V, as now written, divides the

other crafts’ total compensation into a direct wage

category and an indirect fringe benefit category

without changing the basic intent.’’

* * *

‘For example, the parties modified the formula

in 1967 to take into account the indirect form of

compensation known as fringe benefits. Tr. 18-19.

The other crafts’ fringe increases are now

computed separately from their wage rate

increases, and both are plugged into the formula

at a different step. Art. V, Steps 2-4. Thus, in its

present form Article V divides the other crafts’

12

total compensation into a direct wage category and

an indirect fringe benefit category; but the intent

is still the same: all of the other crafts’

compensation for services rendered is to be used

in computing the wages of the elevator

constructors.”’

Arbitrator Garrett then made the following finding:

‘*It thus is of more than passing interest that only

one basic change appears to have been made in

the general scheme of Article V since 192]. That

change occurred when Article V was revised in 1967

to recognize that ‘fringe benefits’ had emerged as

a major monetary element in most building trades

agreements, usually negotiated as a significant

portion of a ‘package’ settlement. Since 1967,

therefore, Article V has contemplated that

‘increases in fringe benefits’ (for the respective

building trades Unions) will be calculated in cents

per hour and plugged into the wage rate

determination formula, commencing at Step 4.’’

The IUEC’s brief to Arbitrator Garrett contains the following

representations:

‘“*The agreement expresses the wages of elevator

constructors as a function of the wages paid to

other crafts in the same locality. Under the Article

V formula, local elevator constructors’ wages are

equal to a modified average of the wages for the

four most highly paid other crafts in the local

area.’’ (Emphasis supplied.)

* * *

13

“The formula requires the use of a modified

method of averaging the wage rates for the four

highest crafts which includes a variety of rather

complex adjustments.’’ (Emphasis supplied.)

‘*Indeed, when the analogue to the Article V wage

formula was first adopted in 1921, the term ‘wage

rate’ did not require any elaborate definition,

because virtually all building trades employees were

paid a single hourly wage which constituted all of

their compensation for services rendered. The

intent of the parties at that time was clearly to have

the total compensation of the elevator constructors

determined by averaging the total compensation

of the other top trades.’’

**This intent has remained the same over the years,

although the parties have had to modify the wage

formula in response to innovations in the

construction industry. For example, the parties

modified the formula in 1967 to take into account

the indirect form of compensation known as fringe

benefits. Tr. 18-19. The other crafts’ fringe

increases are not computed separately from their

wage rate increases, and both are plugged into the

formula at a different step. Art. V, Steps 2-4. Thus,

in its present foria Article V divides ine other

crafts’ total compensation into a direct wage

category and an indirect fringe benefit category;

but the intent is still the same: all of the other

crafts’ compensation for services rendered is to be

used in computing the wages of the elevator

constructors.’’ (Emphasis supplied.)

E. Finally, it is undisputed that during the strike in 1967 NEII

proposed that, if the cost of fringe benefits were stripped

14

completely from the formula, NEII would negotiate for fringe

benefits independently of the formula and also guarantee a 3%

annual increase under the formula itself. The IUEC rejected this

proposal. The IVEC termed the offer of a 3% guarantee

‘*meaningless’’ because ‘‘with the exception of one or two locals,

all local unions have gotten better than 3% a year under the

Atlantic City Plan’’ as it existed prior to 1967. It would be

anomalous, to say the least, to believe that the IUEC, which ft-und

an offer of a 3% guaranteed increase to be ‘‘meaningless’’, had

as of one of its objectives in negotiations the elimination of the

possibility of wage decreases under the formula.

ARGUMENT

The District Court and Court of Appeals correctly applied

the appropriate legal standard.

In its statement of the ‘‘question presented’’ in its petition

for a writ of certiorari, the IUEC poses a question which makes

the unwarranted assumption that Arbitrator Goldberg’s opinion

construes contractual language ‘‘to mean its very opposite.’’ This

€ is simply not the case. In effect, the IUEC is asking this Court

to assume that the IUEC’s interpretation of the collective

bargaining agreement is the only possible interpretation and, based

on this unwarranted assumption, to hold that Arbitrator

Goldberg’s award does not draw its essence from the collective

bargaining agreement.

There is no dispute in the instant case concerning the standard

which should be applied by a federal District Court in determining

whether to confirm or vacate an arbitrator’s award. Both parties

urged the District Court to apply the test described in United

Steelworkers of America v. Enterprise Wheel & Car Corp., 363 |

i

|

|

aa

15

U.S. 593 (1960), that is, to determine whether Arbitrator

Goldberg’s award ‘‘drew its essence’’ from the Standard

Agreement.

The District Court held that:

‘“*After reviewing a 196-page transcript and volumi-

nous exhibits, Goldberg handed down a careful,

well-reasoned, 33-page decision in which he

concluded that the terms of the collective

bargaining agreement between the IUEC and the

NEII allowed the employers to reduce the wages

of elevator workers when the wages of other

construction workers went down. Because this

decision ‘draws its essence from the collective

bargaining agreement,’ the Court, as explained

above, cannot set it aside.”’

x * *

‘*Although the collective bargaining agreement

speaks in terms of wage increases, Goldberg quite

properly looked to the history of the agreement

and found that the use of the word ‘increases’ was

not in any way intended to bar decreases. He

appropriately found that there apparently had

never been any wage decreases in the construction

industry in the past and so the subject of decreases

had not been contemplated by either side during

the negotiations that led to the signing of the

contract. Based on the evidence before him, it

cannot be said that Goldberg was incorrect in

rejecting the IUEC’s claim that some of the

changes in the wording of the collective bargaining

agreement were intended to eliminate the possibility

of wage decreases.’”’

16

‘‘Goldberg interpreted the collective bargaining agreement in a

manner consistent with the language, intent, and history of the

coniract.’”’

The Court of Appeals affirmed the District Court

‘*substantially for the reasons stated in the opinion of Judge

Goettel.’’

In its petition for a writ of certiorari, the IUEC argues, in

substance, that the District Court and the Court of Appeals

misapplied the Steelworkers test. As noted supra, this is circular

reasoning which begins with the ungupportable assumption that

the IUEC’s interpretation of the wage formula is the only possible

interpretation.

The IUEC’s argument in this case is purely a semantic

argument. In the 1967 negotiations the parties never discussed

the proposition that the formula should be changed so that there

could never be a reduction in the wage rate of the elevator

constructor even though the wage rates of the other building trades

were reduced. The employers never agreed to such a concept. Even

though there was a seven-week strike, this proposition was never

discussed at the bargaining table. Indeed, it would be highly

unlikely that such a discussion would ever have taken place in

1967 because at that time and for many years prior thereto every

collective bargaining agreement in the building trades brought forth

wage increases. The possibilty that wage rates in the building

industry would generally decline was far from anyone’s mind.

As noted before, it was certainly not one of the IUEC’s stated

objectives in the bargaining. Even after the 1967 Standard

Agreement was signed, the IUEC never advised its members that

the IUEC had achieved what it now claims it has achieved. On

17

the contrary, (1) what the IUEC told the employers in bargaining

and (2) what the IUEC told the general public and (3) what the

IUEC told its own membership was that the purpose of the changes

in the collective bargaining agreement was to keep the elevator

constructors ‘‘on a par’’ with other building trades unions. Keeping

‘on a par’’ with the other unions is a far different concept than

the concept of guaranteeing that the wages of the elevator

constructors would never be reduced under the formula, even

though the wage rate of every other building trade union is

reduced.

The record shows that in calculating the Cedar Rapids wage

rate, NEII precisely followed the mathematical steps of the Atlantic

City formula. The IUEC argues that the result achieved by

following the mathematical steps of the formula must be rejected

because, the IUEC argues, the result is not an ‘‘increase’’ in the

wage rate of the elevator constructor. The IUEC’s argument rests

upon the contention that the use of the word ‘“‘increase’’ in

describing the result obtained under the formula is controlling

over everything else in the formula.

The IUEC’s argument ignores the fact that the mathematical

steps of the formula support NEII’s result. Putting the IUEC’s

argument in its best light, the use of the word ‘“‘increase’’, in

context with the rest of the formula, would arguably create an

ambiguity in the formula. Any such ambiguity should be resolved

by examining the intent of the parties during the 1967 negotiations,

an examination which Arbitrator Goldberg found to

overwhelmingly support NEII’s position.

It must be emphasized that Arbitrator Goldberg correctly

evaluated the importance of the fact that the IUEC concedes that

for 46 years, from 1921 to 1967, the Atlantic City formula was

an ‘‘averaging’’ formula. Thus, this is not a case in which

Arbitrator Goldberg construed language to give it a meaning that

18

never previously existed in the industry. Rather, Arbitrator

Goldberg’s analysis starts with the premise that the Atlantic City

formula was for 46 years an averaging formula and the question

is whether the evidence shows that the averaging concept was

dropped from the Atlantic City formula and replaced by the

concept of a guaranteed wage rate which could only rise and never

fall even though the other building trades unions negotiated wage

rate reductions.

It has often been observed that collective bargaining

agreements are not negotiated in a vacuum. Prior to the 1967

negotiations, both parties understood the essence of the Atlantic

City formula to be a wage rate formula in which the wage rate

for the elevator constructor was determined by averaging the wage

rates of the other building trades unions in the same geographic

locality. The [UEC acknowledges that under this basic averaging

concept, the wage rate for the elevator constructors could rise

or fall, depending upon the rates for the other trades. The Standard

Agreement expressly provides that the formula negotiated in the

1967 negotiations is an amendment of the formula (for the reasons

set forth above}, not a repudiation of it nor the substitution of

a wage rate guarantee for the averaging concept.

The decision of the Court of Appeals for the Second Circuit

is not in conflict with the decision of any other circuit.

In its argument to the Second Circuit, the [UEC cited the

decisions of several other circuit courts which vacated an

arbitrator’s award in whole or in part. All of the cases cited by

—the IUEC are distinguishable from the instant case. The Second

Circuit obviously saw no conflict between the affirmance of

Arbitrator Goldberg’s award and the cases relied upon by the

IUEC. The Second Circuit did not find the issue in the instant case

19

to be of sufficient precedential value to even warrant an opinion.

Both the Second Circuit and the District Court had no difficulty

in discerning that Arbitrator Goldberg’s Award ‘‘drew its essence”’

from the collective bargaining agreement, notwithstanding the fact

that there have been other arbitration awards in other cases which

have failed to meet this test. [It is plainly inaccurate to state that

the decision of the Second Circuit is in conflict with the decisions

of other Circuits merely because the results reached in applying

the Steelworkers test differ from case to case.

The IUEC cites H.K. Porter Company Inc. v. United Saw,

File and Steel Products Workers of America, 333 F.2d 596 (3rd

Cir. 1964) as an example of a situation in which the Third Circuit

vacated a portion of an arbitrator’s award. The Porter decision

is not in conflict with the instant case. If anything, the general

approach in the Porter case tends to support NEII.

Porter is a case in which past practice is accepted by the Third

Circuit as a basis for modifying the clear and unambiguous terms

of a pension plan in one respect but not accepted in another

respect. The instant case is entirely different in that Arbitrator

Goldberg did not find the modified wage formula to be clear and

unambiguous. Rather, Arbitrator Goldberg iurned to the history

of negotiations between the parties in order to ascertain the intent

of a complex wage formula because of the IUEC’s claim of an

apparent inconsistency between (1) the mathematical directions

of the wage formula and (2) the characterization of the results

of the mathematical directions.

The IVEC relies upon Timken Company v. Local Union No.

1123, United Steelworkers of America, 482 F.2d 1012 (6th Cir.

1973). This is also a case which supports NEII’s position rather

than the IUEC’s position. In Timken, the Sixth Circuit overturned

an arbitrator’s award wherein an arbitrator substituted his

judgment of a ‘voluntary quit’’ in place of an express definition

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of the term in the collective bargaining agreement. In a footnote

appearing at page 1015, the Sixth Circuit stated, in part, as follows:

‘*In this regard, we intimate no view as to the

merits, but, rather, merely notice that even though

the Arbitrator could have properly utilized sources

outside the agreement for guidance and context,

the dearth of such information in his opinion

makes it difficult to contradict the unambiguous

language of the agreement. It is axiomatic that if

the Arbitrator undertook to, in effect, amend the

contract, to substitute his own discretion for that

oi the parties or to dispense his own brand of

industrial justice, the enforcement of the award

rust be denied.’’

Unlike Timken, Arbitrator Goldberg painstakingly considered

the context in which the wage formula was modified during the

1967 negotiations. Arbitrator Goldberg’s analysis is precisely the

articulated rationale which the Sixth Circuit found to be missing

in Timken.

The IUEC cites Milwaukee Typographical Union No. 23 v.

Newspapers, Inc., 639 F.2d 386 (7th Cir. 1981), cert. denied, 454

U.S. 838 (1981) as an example of a case in which the Seventh

Circuit refused to enforce an arbitrator’s award. In Milwaukee

Typographical, an arbitrator ordered an employer to negotiate

over the ‘‘impact’’ of a new process, including negotiations as

to ‘‘involuntary layoff, termination, bonuses and loss of

overtime.’’ Milwaukee Typographical at 393. It was not contended,

nor did the arbitrator therein find, that the contract required

bargaining on these subjects. Rather, the arbitrator therein simply

included these additional items as subjects for bargaining in his

award. But none of this is relevant to the instant case where

Arbitrator Goldberg was asked to interpret a complicated

\

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modification of a wage formula in a set of circumstances which

the [UEC and NEII did not discuss at the time of the negotiations.

The IUEC relies upon Detroit Coil Comrany v. International

Association of Machinists and Aerospace Workers, Lodge 82,

594 F.2d 575 (6th Cir. 1979), cert. denied, 444 U.S. 840 (1979),

a case in which the Sixth Circuit overturned an arbitrator’s award

where the Court found that there was ‘‘no evidence in the record’’

which would allow the arbitrator to reach the conclusion that

the parties ‘‘to any extent waived compliance with’’ the collective

bargaining agreement therein. There is simply no similarity between

Detroit Coil and the instant case because there is ample support

for Arbitrator Goldberg’s decision in the instant case.

In Textile Workers Union No. 1386 v. American Thread Co.,

291 F.2d 894 (4th Cir. 1961), the arbitrator therein “dispensed

his own brand of industrial justice’’ contrary to the terms of the

collective bargaining agreement. The arbitrator therein expressly

found an employee to have committed actions which constituted

just cause for discharge under the collective bargaining agreement

but, contrary to this finding, the arbitrator nevertheless ordered

the employer to reinstate the employee. From both a legal and

factual viewpoint, this situation is far different from the instant

case where Arbitrator Goldberg’s opinion evaluates conflicting

testimony and reaches a conclusion by interpreting ambiguous

contract language through examination of the bargaining history

which preceded the execution of the collective bargaining

agreement. There is no inconsistency in Arbitrator Goldberg’s

opinion; Arbitrator Goldberg simply reviewed all of the evidence

and interpreted the contract accordingly.

In Clinchfield Coal Company v. District. 28, United Mine

Workers of America, 720 F.2d 1365 (4th Cir. 1983) the collective

bargaining agreement prohibited the licensing of coal mining

‘*operations’’ which ‘‘resulted’’ in layoffs of the licensor’s

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employees. The arbitrator therein found that the licensing of coal

‘*lands’’ violated the collective bargaining agreement even though

it was clear that the licensing of the coal ‘‘lands’’ preceded the

layoffs by many years and did not ‘‘result’’ in the layoffs. The

Fourth Circuit vacated the arbitrator’s award because (1) the

arbitrator had ignored the clear distinction between coal

‘*operations’’ and coal ‘‘lands’’ and (2) the arbitrator had not

found any causal relationship between the licensing and the layoffs.

It cannot be said that Arbitrator Goldberg ignored any relevant

facts or provisions of the collective bargaining agreement. To the

contrary, to the extent that the collective bargaining agreement

is ambiguous, Arbitrator Goldberg examined the history of

bargaining to ascertain the intent of the parties.

In Pacific Motor Trucking Co. v. Automotive Machinists

Union, 702 F.2d 176 (9th Cir. 1983) the arbitrator therein refused

to permit an employer to demote a working foreman even though

the arbitrator recognized that the collective bargaining agreement

expressly gave the employer discretion over the working foreman

position. Again, unlike the instant case, the arbitrator in Pacific

Motor Trucking ‘‘dispensed his own brand of industrial justice’’

contrary to the collective bargaining agreement.

CONCLUSION

For the foregoing reasons, the IUEC’s petition for a writ

of certiorari should be denied.

Respectfully submitted,

CHARLES O. STRAHLEY

Counsel of Record

PUTNEY, TWOMBLY, HALL

& HIRSON

Attorneys for Respondent