Reply Brief — United Food & Commercial Workers, Local 626 v. Kroger Co.

Supreme Court, U.S,

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| JUL S31 1066

No. 85-1778 JOSEPH F. SPANIOL, JR.

“BER —

In the Supreme Court of the United States

October Term, 1985

UNITED FOOD & COMMERCIAL WORKERS,

LOCAL 626,

Petitioner,

VS.

THE KROGER COMPANY,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES CourRT OF APPEALS

For THE SIXTH CIRCUIT

REPLY BRIEF IN SUPPORT OF PETITION

FOR A WRIT OF CERTIORARI

TepD Ior10o, Counsel of Record

GALLON, Kautniz & Ior1o Co., LPA

3161 N. Republic Blvd.

Toledo, Ohio 43615

(419) 535-1976

Counsel for Petitioner Local 626

THE GATES LEGAL PUBLISHING CO., CLEVELAND, OHIO—TEL. (216) 621-5647

TABLE OF CONTENTS

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TABLE OF AUTHORITIES

Cases

IAM Lodge No. 1266 v. Panoramic Corp., 668 F.2d 276

ee at Ne scesasbctiesciiecelectaddniahcaeiatveSsscbtietaaaiesia 3, 4,5

Johanson v. San Diego District Council of Carpenters,

7466 Fae ise (0th Cie. 1906)... 7

Lever Bros. Co. v. International Chemical Workers

Union, Local 217, 554 F.2d 115 (4th Cir. 1976) ........ 5

Local 1115, Joint Board Nursing Home & Hospital

Employees v. B & K Investments, Inc., 436 F. Supp.

PE Bs BN steetececenyastcondhcccnnsbincsinaissatmscnnaseniooniess 4

Mills v. Electric Auto-Lite Co., 396 U.S. 375 (1970) ... 6

National Labor Relations Board v. Express Publishing

Se re RR ID cirri ecstatic cecicoctndncntiinsnnne 6

National Labor Relations Board v. International Van

Ra, Mr Ws ND sicher 6

Nursing Home & Hospital Union No. 434 v. Skyview

Terrace, Inc., 759 F.2d 1094 (3rd Cir. 1985) -............... B)

Smegal v. Gateway Foods, 763 F.2d 354 (8th Cir. 1985) 5

Super Tire Engineering Co. v. McCorkle, 416 U.S. 115

I cies aidacteeilchicisniatrbiacaciaaaciatenecinrncosomsenianialianiciiee 7

Weinstein v. Bradford, 423 U.S. 147 (1975) _ Ww... 6, 7

No. 85-1778

In the Supreme Court of the United States

October Term, 1985

UNITED FOOD & COMMERCIAL WORKERS,

LOCAL 626,

Petitioner,

vs.

THE KROGER COMPANY,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES CouRT OF APPEALS

FoR THE SIXTH CIRCUIT

REPLY BRIEF IN SUPPORT OF PETITION

FOR A WRIT OF CERTIORARI

I. INTRODUCTION

The following brief discussion is in response to the

new arguments raised in Respondent Kroger Company’s

(hereinafter referred to as the “Company”) Brief in Oppo-

sition to the Petition for a Writ of Certiorari filed in

this Court by Petitioner United Food & Commercial

Workers Local No. 626 (hereinafter referred to as the

“Union”). To briefly summarize the relevant facts as

set forth in the Petition, in 1984 the Kroger Company

sought contract concessions from the Union, threatening

to close the Company’s three (3) Lima, Ohio stores if

the concessions were not met. The Company rejected

2

the Union’s counterproposals and closed the three (3)

Lima, Ohio stores in late 1984.

The Union filed a grievance pursuant to the suc-

cessors and assigns clause of the contract between the

parties! When the Company refused to arbitrate the

grievance, the Union filed suit in the United States Dis-

trict Court for the Northern District of Ohio, Western

Division, to enjoin the sale or other transfer of the Lima,

Ohio stores pending resolution of the Union’s grievance

by an arbitrator. The District Court refused to enjoin

and the Company sold the stores. The United States

Court of Appeals for the Sixth Circuit affirmed the Dis-

trict Court’s denial of injunctive relief, but determined

that the Company’s sale of the stores did not render

the controversy moot. The Union filed a Petition for

Rehearing with Suggestion for Rehearing En Banc in

the Sixth Circuit. The Sixth Circuit denied the Petition

for Rehearing, whereupon the instant Petition for a Writ

of Certiorari was filed.

Il. ARGUMENT

A. RESPONDENT HAS FAILED TO REFUTE

THAT A CONFLICT AMONG THE CIRCUITS

EXISTS.

The Company’s Brief in Opposition unsuccessfully

attempts to refute the conflict among the Circuits that

is perpetuated by the opinion below. The Company at-

tempts to distinguish the Seventh Circuit’s decision in

1. The successors clause is found in the Preamble of the

contract between the parties, and provides that the agreement

is between the Company, “its successors and assigns’, and the

Union. See App. pp. Al9 and A36.

3

IAM Lodge No. 1266 v. Panoramic Corp., 668 F.2d 276

(7th Cir. 1981), by the same invalid argument that it

has advanced throughout this litigation. The Company

claims that the Panoramic Corp. decision is distinguish-

able in that the balancing of the hardships in Panoramic

did not involve a sale motivated “by any financial im-

perative” on the part of the employer. Respondent urges

that the sale of the three (3) Lima, Ohio Kroger stores

was based upon such a financial imperative. The dollar

losses claimed by the Company at the District Court

hearing were largely projections and failed to consider

such significant matters as tax consequences favorable

to the Company and the transferability of a large portion

of the Lima stores’ inventory and equipment to other

nearby Company stores.?, More importantly, the Com-

pany’s assertion of financial imperative ignores a basic

prerequisite to injunctive relief—namely, the Petitioner’s

obligation to obtain a bond as security for the payment

of costs and damages incurred by the Company should

it later be determined that the Company was wrongfully

enjoined.

The Panoramic decision does not advance the same

definition of financial imperative as the Respondent. Even

if this Court were to assume that the Company’s projected

losses were reasonably substantiated, those losses would

be insufficient to constitute a financial imperative within

2. In footnote 5 of its Brief in Opposition, the Respondent

peints out that the Union objected to the introduction of such

evidence concerning the merits of the grievance prompting the

injunction. This objection was made by Petitioner’s counsel on

the ground that the Court was not the proper forum in which

to adjudicate the merits of the grievance. At the time of the

objection, Petitioner’s counsel did not expect that the District

Court would proceed as it did by ruling upon the merits of the

underlying grievance without admitting all relevant evidence

concerning the grievance.

4

the meaning of Panoramic. In describing a situation

wherein a financial imperative might justify tipping the

balance of hardship in favor of an employer, the Seventh

Circuit stated:

The instant case [where injunctive relief is warranted |

is ... unlike the situation in Local 1115, Joint Board

Nursing Home & Hospital Employees v. B & K In-

vestments, Inc., 436 F. Supp. 1203, 1209 (S.D. Fla.

1977), in which the Court denied (but subsequently

granted) an injunction against the sale of a business

on the ground that the loss of the proposed purchaser

would force the seller out of business.

See Panoramic Corp., 668 F.2d at 289. The urgent cir-

cumstances described in Panoramic’s description of “finan-

cial imperative” do not match the Respondent’s definition.

The Lima, Ohio stores represent but three (3) of the

Kroger Company’s one thousand ninety (1,090) stores

nationwide. An injunctive delay in transferring these

stores would not have had any adverse impact upon the

Kroger Company’s business as a whole.

Whether or not the Company’s sale of its Lima, Ohio

stores was motivated by a proper financial imperative

is an element of the broader issue of balancing the hard-

ships between the parties. When balanced against the

hardship that the Union would suffer as a result of the

Company’s breach of the collective bargaining agreement

and the resulting vitiation of the arbitral process, the

Kroger Company’s unsubstantiated losses on three (3)

of its one thousand ninety (1,090) stores nationwide can-

not reasonably be viewed as a financial imperative war-

ranting immediate sale.

The overriding issue in the instant case is the con-

tinued viability of the arbitral process, and the negative

5

impact that the existing conflict among the Circuits will

have upon preserving arbitration as a means of industrial

dispute settlement. The Respondent evades this issue

in its discussion of the cases posing conflict with the

Panoramic decision. The Respondent asserts that the

Third Circuit’s decision in Nursing Home & Hospital

Union No. 434 v. Skyview Terrace, Inc., 759 F.2d 1094

(3rd Cir. 1985) is inapplicable to the present case because

it involves the distribution of sale proceeds pending arbi-

tration. Similarly, the Respondent dismisses as irrelevant

the Fourth Circuit’s decision in Lever Bros. Co. v. Inter-

national Chemical Workers Union, Local 217, 554 F.2d

115 (4th Cir. 1976), on the ground that the Fourth Cir-

cuit’s decision did not involve a challenge to the District

Court’s balancing of the hardships. These cases are rel-

evant to the case at bar in that they focus upon the pres-

ervation of the arbitral remedy. it is the conflicting

manner in which the Circuits have acted to enforce the

arbitral remedy that presents the conflict giving rise to

the instant Petition for a Writ of Certiorari.

In view of the Respondent’s failure to recognize this

critical issue, it is not surprising that the Respondent

questions the relevance of the Eighth Circuit’s decision

in Smegal v. Gateway Foods, 763 F.2d 354 (8th Cir. 1985).

Although the Smegal decision arose in the context of a

suit for breach of the duty of fair representation, the

Smegal case is highly relevant to the facts at bar in

that it imposes upon unions the duty to enforce contract

successors and assigns clauses on behalf of union mem-

bers. The present split in the Circuits renders it im-

possible for a union to take effective measures to enforce

contract successors and assigns language. The Smegal

decision is significant in that it imposes upon unions a

duty which the courts will not consistently permit it to

perform.

6

B. THE ISSUES PRESENTED ARE NOT MOOT

The Respondent begins its argument in favor of moot-

ness by stating that:

Kroger long ago disposed of the assets of the three

(3) Lima stores. Thus, the action the Union sought

to enjoin has already occurred and can no longer

be prevented.

See Brief in Opposition at p. 8.* This rhetorical argu-

ment fails to address the applicability of the exception

to the mootness doctrine outlined in Weinstein v. Brad-

ford, 423 U.S. 147 (1975). Briefly, Weinstein permits

judicial review where:

(1) the challenged action was in its duration too

short to be fully litigated prior to its cessation

or expiration, and

(2) there was a reasonable expectation that the same

complaining party would be subjected to the

same action again.

3. The Respondent’s objections on the issue of mootness

would be more appropriately raised in the form of a cross

petition. Although the Respondent does not elaborate upon its

objections to the Sixth Circuit’s ruling on mootness, its argu-

ment, if accepted by this Court, would constitute a complete

defense to the Company. See Mills v. Electric Auto-Lite Co.,

396 U.S. 375, 381, n.4. If this Court were to rule on the instant

Petition on the basis of mootness, such a finding would not

onry reverse a significant portion of the Sixth Circuit’s decision,

but would further negate the propriety of the appeal to the

Sixth Circuit in its inception. The Company’s willingness to

accept the Sixth Circuit’s holding with respect to mootness is

of no consequence. See National Labor Relations Board v. Inter-

national Van Lines, 409 U.S. 48 (1972); National Labor Relations

Board v. Express Publishing Co., 312 U.S. 426 (1941). The

issue of mootness is essential and dispositive of the case at bar,

therefore, the issue of mootness should have been raised in the

form of a cross petition for a writ of certiorari.

7

See 423 U.S. at 149. The Weinstein test, as applied in

Johanson v. San Diego District Council of Carpenters,

745 F.2d 1289 (9th Cir. 1984) is controlling here. Johan-

son extended application of the Weinstein test to the realm

of collective bargaining. Johanson involved the appeal

of a court-ordered ten day picketing hiatus, which had

expired prior to the hearing of the appeal. The pivotal

issue in Johanson was whether or not injunctive relief

was an appropriate remedy for the charged illegality.

See 745 F.2d at 1292-93. The propriety of injunctive

relief is also the central issue before this Court. The

unique nature of the dispute between the Union and the

Company demands injunctive relief in that the Union

cannot enforce the contract’s successors and assigns clause

absent an injunction preventing any sale of Company

assets prior to arbitration.

The Kroger Company, by virtue of its status as a

prosperous, multi-unit corporate entity, is in a unique

position to circumvent the successors and assigns clause

by selling off selected stores at will without any risk

to its economic structure. The Kroger Company and the

Union are signatory to other contracts concerning Com-

pany stores. The exception to the mootness doctrine has

been specifically upheld in collective bargaining situations

characterized by “cyclical” bargaining or recurrent labor

disputes. See Super Tire Engineering Co. v. McCorkle,

416 US. 115 (1974). A balanced collective bargaining

relationship between the parties cannot be sustained if

the Company is permitted to wield the threat of closing

stores without binding successors in the event that con-

cessions are not met to the ietter.

The very fact that the Kroger Company has disposed

of its assets exemplifies why the instant case falls within

8

the “capable of repetition yet evading review” exception to

the mootness doctrine. The Sixth Circuit below properly

concluded that:

See

[t]he issue between these parties is certainly capable

of repetition since this same collective bargaining

contract between the parties covers many other

Kroger stores in Northwestern Ohio. If Kroger sought

to dispose of another of these stores without requiring

an assumption of the obligations of the collective bar-

gaining contract by the purchaser, the same issue

would be presented.

App. p. 7. The Sixth Circuit further held that:

the Union may not be able to obtain an arbitration

ruling as to whether, if the stores had not been sold,

Kroger would have been proscribed, under a proper

construction of the contract, from selling the stores

absent an assumption by the purchaser of the obliga-

tions of the collective bargaining contract. Thus, it

appears to us that this important claim of the Union

may well evade review.

See App. p. 9-10. Thus, even though the Sixth Circuit

arrived at the wrong conclusion concerning the appro-

priateness of injunctive relief, the issue of mootness was

properly dispensed with.

|

CONCLUSION

The arguments raised in the Kroger Company’s Brief

in Opposition are unpersuasive, and exemplify the need

for this Court’s review of the important issues presented

by the case below. For the reasons stated herein and

in its Petition, Petitioner United Food & Commercial

Workers Union Local No. 626 respectfully requests that

this Court issue a Writ of Certiorari to the United States

Court of Appeals for the Sixth Circuit.

Respectfully submitted,

Tep Ior10, Counsel of Record

GALLON, Katniz & Ior1o Co., LPA

3161 N. Republic Blvd.

Toledo, Ohio 43615

(419) 535-1976

Counsel for Petitioner, UFCW

Local No. 626