Appendix — H. K. Porter Co. v. United Saw, File & Steel Products Workers

{ (teva nrwy ° CAML OUP CUS LUUIL, U

FILED "Tl

SUPREME COURT. U. & |

, Ree eine MAY 21: 1969

IN THE

JOHN F. BAVIS. CLERK ki

—s

Supreme Court of the United States

October Term, 1968.

No. 1 Ay 9 | E

H. K. PORTER COMPANY, INC.,

| _ Petitioner,

Vv.

UNITED SAW, FILE AND STEEL PRODUCTS

WORKERS OF AMERICA, FEDERAL LABOR

UNION NO. 22254, AFL-CIO,

Respondent.

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

_ FOR THE THIRD CIRCUIT.

Puitie H. Strusine,

2001 Fidelity Building,

Philadelphia, Pennsylvania. 19109

Attorney for Petitioner,

H. K. Porter Company,

ae.

Pepper, Hamitton & SHEETZ,

2001 Fidelity Building,

Philadelphia, Pennsylvania. 19109

Pau R. Osert,

1500 Porter Building,’

Pittsburgh, Pennsylvania. 15219

Of Counsel.

co

International, 711 So. 50th St., Phila., Pa. 19143—Tel. SA 7-8711 Area Code 215.

INDEX :

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APPENDIX: A |

Opinion of the United States District Court for the

Eastern District of Pennsylvania,

190 F. Supp. 407 (E.D. Pa. 1960).

UNITED SAW, FILE AND STEEL PRODUCTS

WORKERS OF AMERICA, _

FEDERAL LABOR UNION NO. 22254, AFL-CIO

by Joseph Adair, President and Trustee ad litem

Vv.

Ht. K. PORTER COMPANY, DISSTON DIVISION

Civ. A. No. 27077.

United States District Court E. D. Pennsylvania.

Aug. 4, 1960.

Richard H. ‘Morkowite. Wilderman & Markowitz, Phila-

delphia, Pa. for plaintiff.

‘Miles. W. Kirkpatrick, Philadelphia, Pa., Blaine E.

Capehart, Camden, N. J., for defendant.

_ LORD, District Judge.

Plaintiff Union seeks to compel the defendant Company

to proceed to arbitration under a collective bargaining

agreement. The plaintiff Union is the United Saw, File and

Steel Products Workers of America, Federal Labor Union

No. 22254, AFL-CIO, an unincorporated association located

in Philadelphia, Pennsylvania, by Joseph Adair, President

and trustee ad litem. The defendant Company is H. K.

Porter Company, Disston Division, a corporation organized

and chartered under the laws of the state of Delaware, hav-

(1a) i te -

Dicccteicalinten arrests ws yonder

2a Appendix A

ing an office and doing business at its Tacony plant in Phila-

delphia. |

This motion for summary judgment is of course ad-

dressed tathe pleadings only, i. e. the complaint and answer.

This motion, accordingly, in no way involves the merits—

and there is before the Court the bare question of whether

the Union is entitled to the reference to arbitration as a

matter of law. : | .

' Plaintiff asks the Court to order defendant to submit

two sets or groups of disputes (which ‘plaintiff—despite de-

fendant’s vigorous denials—insists are grievances) to arbi-

tration procedure. ’ i

Defendant says that summary judgment is inappropri-

ate, sinee there are -genuine issues as to material facts.

Plaintiff says that such submission ‘to arbitration will be

entirely in accord with the grievance procedure outlined in

Sections III and IV of the collective bargaining agreement

in existence bettveen these parties. Defendant argues that

these disputes are not arbitrable under the contract. Fur-

thermore, defendant says that arbitrability is a matter for

the Court; and that the Court will need detailed considera-

tion of the contractual limitations upon arbitration, Thus

the question is not one to be decided summarily, it says.

Certain matters and circumstances appear uncontra-

dicted from the pleadings, and form a basis for the Court’s

consideration of this motion.

(1) Jurisdiction is conferred on this Court by § 301,

Labor Management Relations Act of 1947, 29 U.S.C.A. § 185.

(2) Plaintiff Union is the collective bargaining repre-

sentative of all employees of the defendant at its Disston

Division, Tacony plant, Philadelphia 30, Pennsylvania, ex-

cept certain classes of employees specifically excluded by

the parties’ collective bargaining agreement and not here

involved. ;

Appendix A. | 3a

(3) The defendant Company is engaged in an industry

affecting commerce within the meaning of § 2(7) of the Na-

tional Labor Relations Act, 61 Stat. 136, 29 U.S.C.A. § 151

et seq.

(4) The plaintiff and defendant are parties to a collec- |

tive bargaining Agreement dated September 1o, 1957 and_

extended by a Supplemental Agreement dated September 1o,

1958.

(5) In February of 1959, the defendant announced that

it intended to move a large part of its production facilities

from its Tacony plant to a plant in Danville, Virginia.

(6) Subsequent to the Company’s announcement of its

intent to move its plant, the Union and the Company had

discussions of severance pay for employees affected and the.

pension rights of rae gp who would be laid off.as.a re-

sult of the move.. No agreement was reached on these

subjects.

At about this juncture, the pleaders part company. The

Union, as indicated, characterizes the subject of: the discus-

sions as grievances, and the discussions as ‘“grievance meet-

ings’’—characterizations which are vigorously disclaimed

by the Company.

Technically, it is true that since the present motion is —

directed solely to the pleadings, the. Union admits the truth

of the Company’s well-pleaded allegations in its Answer.

See 6 Moore’s Fed. Pract. 2058, 2064 (2d ed. 1953). As will

be made more apparent later, however, the present case is

not deemed to be one for technical treatment. The chief dif-

ferences. between the parties, in any event, seem to be as to

the legal effect of the subsequent transactions.

On July 30, 1959 the Union wrote the Company asking

. that the grievances relating to the described subjects be re-

ta mee Appendix A

ferred to the impartial chairman designated in §4 ITI and IV

of the collective bargaining agreement. Disclaiming the -

designation of ‘‘grievances”’ the Company admits receiving

_the letter but says, however, that the Union letter .

“* * * does not suggest any relationship between

the issue of severance pay and the collective bargaining

agreement. It speaks of the failure of the parties to

reach some understanding regarding what the Company

was going to do to assist the employees affected by the .

Danville Move. The Union, in its July 30, 1959 letter,

also speaks with complete vagueness abouter difference

between the Company and the Union with respect to

‘Section XX of the Agreement (Pensions) ‘as it related

to employees affected by the Company’s move to Dan-

ville*** ee

; On August 10, 1959, the Company replied to the Union’s

| July 30, 1959 letter stating in essence that the matters re--

ferred to therein were not arbitrable. .

Ten days later, 127 individual members of the Union—

by letters of August 20, 1959—wrote

‘complaining of the Company’s misinterpretation, mis-

application and violation of 4 XX of the collective bar-

gaining Agreement, relating to Pensions and to the

Company’s refusal to grant or to discuss the counter

proposal su’ymitted by the plaintiff to the company on

an assistance plan for employees affected by the Com-

pany’s move to Danville, Virginia.”’

Defendant concedes that it received these Angust 20

‘communications, but denies that they constituted grievances

and, of course, does not admit the plaintiff’s assertions as to

the merits of the employees’ complaints. _

The defendant takes the narrative one step beyond the |

plaintiff’s version. It is defendant’s assertion that the

Appendix A : 5a

Union thereafter withdrew its demand for severance pay.

Defendant says: |

‘On August 24, 1959 the-patties began negotiations

on a new collective, bargaining Agreement. At that

time plaintiff presented to defendant a written proposal

which contained demands for (1) a severance pay plan ©

and (2) improved pension benefits * * * After’ many.

negotiation sessions between the parties a new contract

was agreed upon on September 15, 1959, in which the

Company agreed to a change in pension benefits and the

Union withdrew its severance pay demand * * rise

It will serve no purpose here to go beyond the bare re-

cital of the defendanit’s foregoing version of those subse-

quent negotiations. Comment on the legal effect of such oc-

currences will be reserved for a later part of this opinion.

The plaintiff’s position is ‘that the foregoing sequence

of events, according ton interpretation, amounts to a vio-

lation of the collective bargaining. agreement by force of

defendant’s refusal to process and arbitrate the described —

grievances. Accordingly, plaintiff asks this Céurt to order .

defendant to abide by its agreement and, accordingly, accept

and process through arbitration these matters which the

. plaintiff has described-as grievances.

Defendant’s. position, as the foregoing suggests, is

simply that severance pay, and the pension rights, of em-

ployees laid off as a result of the plant move to Virginia are

simply matters not comprehended by the grievance and ar-

bitration provisions of the contract. They point out, for

instance, that in § IV B that Agreement states that ‘‘neither

the Company nor the Union agree to submit to arbitration

broad labor policies.’’» These matters, defendant says, con-

cern broad labor policies. |

Another section which defendant urges as controlling

in its favor is 4 XX B of the agreement providing that ‘‘the

Seay

6a Appendix A

only pension problems subject to arbitration”’ are ones in-

volving ‘eligibility within the terms”? of the Pension Plan

set forth in the collective bargaining agreement.

_ Analysis of the legal effect of the foregoing facts and

. contentions will be made in the order of defendant’s princi-

pal grounds of opposition to the motion.

I. Are there Genuine Issues as to.Material Facts?

If there exist genuine issues as to material facts, the

motion for summary. judgment cannot, of course, be granted.

It presently appears, however, that there is no real disagree-

ment as to the transactions between the parties, but only as

to the legal effect of those dealings.

A possible exception is the defendant’s contention that

Jo many negotiation sessions between

the parties a new contract was agreed upon on Septem-

ber 15, 1959 in which the Company agreed to a change in

* pension benefits and the Union withdrew its severance

pay demand * * *

Phe essence of that quoted statement appears as par. 13

of Defendant’s Fifth Defense and may be taken technically

as admitted by plaintiff’s motion, As a matter of law, how-

ever, the Court determines that the pleaded withdrawal of

severance pay demand wS@d not work an estoppel as to

plaintiff’s alleged grievances involving severance pay on

the authority of United Steelworkers of America v. Warrior

and Gulf Navigation Company, 363 U.S. 574, 80 S.Ct. 1347,

4 L.Ed.2d 1409; see Whittaker. J., dissenting 80 S.Ct. 1354,

1356. In that case, arbitration was directed by the Court

even though, as the dissenting opinion cited shows, there

had been unsuccessful Subsequent efforts to negotiate the

very concession involved in the grievance,

4

-

Appendix A i 7a

II. The Contention that Arbitrability is for the Court to

Determine and in Making its Determination the Court

Must of Necessity Consider the Contract.

Deferdant’s essential point, of course, is that proper

consideration of the contract and so much of its background

as will make possible its proper construction is no matter

for summary judgment. The recommended analysis-in-

depth, so to speak, is a matter more readily to be discussed

_ in the third branch of this discussion rather than at present.

On the general topic, however, both sides have quoted in’

their briefs from the opinion of this Court in Cuneo Eastern .

Press, Ine. of Pa. v. Bookbinders and Bindery Women’s

Union, Local No. 2, D.C.E.D.Pa. 1959, 176 F.Supp. 956. The .

quoted passages are generalizations, culled from collected

authorities, to the effect that the Court must determine arbi-

trability in the first instance, and that arbitration is favored

in labor disputes. The Court affirms that decision.

TI. Are these Grievances Arbitrable?

Defendant’s final point, that the grievances are not ar-

bitrable under the contract, brings one to the crux and es-.

sence of this matter.

"Three cases decided during the pendency of this motion

were recognized by counsel as being likely to determine this

motion, as shown by the fact that both sides immediately

sought and received leave to file supplemental briefs on the

three decisions handed down June 20, 1960: United Steel-

workers of America v. American Mfg. Co., 363 U.S. 564, 80

S.Ct. 1343, 4 L.Ed.2d 1403 ; United Stéelworkers of America

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

1347, 4 L.Ed.2d 1409; United Steelworkers of America v.

Enternrise W. & Co. Corp., 363 U.S. 593, 80 S.Ct. 1358, 4

L.E.3.2d 1424, The Warrior case is the only one deemed to

have direct bearing on the present motion, but some sense

8a | Appendix 4

of the impact of these cases may be conveyed by the follow-

ing comment in Law Weck for July 12, 1960:

‘‘Three years ago, in Textile Workers [of America]

' ev. Lincoln Mills, 353 U.S. 448 [77 S.Ct. 912, 1 L.Ed.2d

972] 25 LW 4287, the Supreme Court declared that the

federal courts should formulate the law to be applied in

enforcing arbitration clauses in collective bargaining

agreements. This year, the Court took long steps for-

ward in the implementation of this doctrine. Ina series

of three opinions, the Court made it clear that the judi-

ciary was to play a very minor role in the arbitral proc-

ess; the major role is to be played by the arbitrators

selected by the parties,’’

The Warrior case bears quite squarely on the present

point, and permits no option other than granting plaintiff’s

motion. United Steelworkers of America v. Warrior & Gulf

Navigation Co., 363 U.S, 074, 80 S.Ct. 1347, 4 L.Ed.2d 1409.

The Warrior company maintains a terminal at Chica-

saw, Alabama, where it performs maintenance and repair

work on its barges. The employees at that terminal consti-

tuted a bargaining unit, represented by the petitioning

United Steelworkers, and were covered by a collective bar-

gaining contract negotiated by the petitioner union. Be-

tween 1956 and 1958 the terminal laid off about half of the.

employees of the bargaining unit. That reduction was due

in part to Warrior’s contracting-out. certain maintenance

work, formerly done by its own employees, to other com-

panies,

On behalf of a group of terminal employees the peti-—

tioner presented a grievance protesting the Company’s ac-

tions in contracting-out that work, alleged to have the effect

of a partial lockout, The opinion continues:

Appendix A 9a

“The collective agreement had both a ‘no strike’

and a ‘no lockout’ provision. It also had a grievance ©

procedure which provided in relevant part as follows

‘¢* * * matters which are .strictly a function of

‘management shall not be subject to arbitration under

this section.’?

The further provisions of the collective bargaining

agreement, providing for references to arbitration if the

matter cannot be settled at lower echelons, are prefaced by

the following language : |

‘‘Should differences arise between the Company

and the Union or its members employed ,by the Com-

pany as to the meaning and application of the provisions

of this Agreement, or should any local trouble of any

kind arise. * * * ” | |

When the grievance was not settled, and Warrior re-

fused arbitration, this suit was commenced by the union to

compel it.

‘ The District Court svi respondent’s motion to dis-

nities the complaint, 168 F.Supp. 702, 705, on the principal

aod ground that

‘the contracting out of repair and maintenance work

* * * is strictly a function of management not limited

in any respect by the labor agreement involved here.”’

The.Court of Appeals for the Fifth Circuit affirmed, the

majority agreeing that the matter was an excluded ‘‘func-

tion of management.’’ 269 F.2d 633, 635.

The opinion of the Court by Mr. Justice Douglas com-

mences by restating the principles of the Lincoln Mills case

approving federal enforcement of the provision, for arbitra-

tion of grievances in a collective bargaining agreement.

10a Appendix A

Textile Workers Union of America v. Lincoln Mills, 1957,

303 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972.

The language of Mr. Justice Douglas makes clear that

all doubts are to be resolved in favor of arbitrability. Arbi-

tration would be compelled unless it can be said with posi-

tive assurance that the arbitration clause is not susceptible

to an interpretation that covers the dispute.

The mandate of ¢his decision of the United States Su-

preme Court seems clear as applied to the present case. The

contract involved in Warrior specified as not arbitrable mat-

ters ‘‘strictly a function of management’’. In the instant

case “‘broad labor policies’’ are likewise excluded. If con-

tracting work to outside plants was not a function of man-

agement, it seems evident that the present disputes are not

exempt from arbitration as ‘‘broad labor policies.”’

_ The provisions of the respective contracts as to that

_-which'is arbitrable in Warrior and the Disston collective

7 bargaining agreement are virtually identical.

In the instant case, the arbitration clause is quite broad,

_and the quoted clause and another reference to non-arbitra-

ble matters are both quite vague. The Warrior opinion is

replete with language which requires arbitration in such

case, of which the following passage is an example:

‘«* * * In the absence of any express provision ex-

cluding a particular grievance, from arbitration, we

think only the most forceful evidence of a purpose to

exclude the claim from arbitration can prevail, particu-

larly where, as here, the exclusion clause is vague and

the arbitration clause quite broad * * * ”’ Ibid., 80 S.Ct. |

1354.

For the foregoing reasons, it is the ruling of this Court

that the plaintiff is entitled to Judgment on its motion for

summary judgment and an appropriate order may be sub-

mitted.

Appendix B lha

APPENDIX B

Order of the United States District Court for the

Eastern District of Pennsylvania

‘ ORDER.

Anp Now, to wit, this 11th day of April, 1961, it is

hereby ordered and decreed that the plaintiff’s Motion for

Summary Judgment in the above matter be, and the same is

hereby. Granted, and that Summary Judgment is hereby

entered in favor of plaintiff, United Saw, File and Steel

Products Workers of America, Federal Labor Union No.

22254, AFL-CIO, and that defendant is hereby OrpeErEp to

‘‘conform and comply with Sections III and IV of the Col-

lective Bargaining Agreement between itself and the plain-

tiff, to select an Impartial Chairman and to submit to arbi-

tration, subject to the provisions of the Collective Bargain-

ing Agreement, the grievances with respect to pensions and

severance. pay insofar as such grievances arise under the

' ‘provisions of the Collective Bargaining Agreement and con-

stitute claimed violations thereof. Each party to bear its

own costs on this appeal. :

By THE COURT,

| /s/ Lorp, J.

12a . oo Appendix C

APPENDIX C

- ——-

Award of Arbitrator W. Roy Buckwalter

Tue: Unpersicnep ArsitratTor, having been dé¢signated

in accordance with.the Arbitration Fh NO ie into

by the above-named Parties, and dated September 15,.1957,

-and having been duly sworn and having duly heard ‘the -

proofs and allegations of the Parties, Awarp, as follows:

Pensions: The Arbitrator rules that:

1. Each employee who, at the time he was terminated, had

completed twenty-five years or more of service, but had not

yet reached age sixty-five, shall be paid a full pension. |

The formula for payment to be worked out " H. K.

Porter Company and the Union.

-. Each terminated employe shall receive a $1, 000: non-

contributory life insurance policy as provided for in Sec-

tion XIX-A. he :

2. Each employee, who at the time he was terminated had

reached age sixty-five, but had not completed twenty-five

years of service shall be paid a pro rata pension based on

an equitable formula to be worked out by H. K. Porter Com-

pany and the Union.

Each terminated employee shall receive a $1,000 non-

conjributory life insurance policy as provided for in Sec-

tion XIX-A.

3. The request for pensions for employees who, at their

termination, had not yet reached age sixty-five and who had

not put in twenty-five years of service is saat

Severance Pay: . |

The Union’s request for severance pay i is denied,

W. Roy Bucxwatrur

W. Roy Buckwalter,

Impartial Chairman.

Darep: August 17, 1962 2

Case No, L-31115-Phi-L-346-61

Appendix C eS

OPINION OF ARBITRATOR.

GRIEVANCE.

‘“‘The issues to be arbitrated relate to pensions and

severance pay, as required by the Order of the United States

District Court for the Eastern District of Pennsylvania, a —

conformed copy of which is attached hereto.

The Union grieves that the Company has misinterpreted

and misapplied Article XX of the Agreement insofar as the

eligibility for pensions of employees affected .by the Com-

pany’s movement of its plant to Danville, Virginia, is con-

cerned. In addition, the Union grieves that the Company’ s

proposal entitled ‘‘Employee Assistance Plan for Employ-

ees Affected by the Danville Move is unacceptable and the.

Company has refused to discuss counter-proposals submit-

ted by the Union, or to take any action thereon in the making

of adequate provision for employees — by the Com-

pany’s move to Danville, Virginia.”’

‘BACKGROUND.

For many years Henry. Disston & Sons, Inc., a Penn-

sylvania corporation, operated a plant in Philadelphia. It

was engaged in the production of armor plate, steel, and.

small tools.

In November, 1955, the H. K. Porter Company, in ex-

change for stock, acquired substantially all assets, subject

to liabilities, of Henry Disston & Sons, Ine. .

In February, 1959, a-meeting was held between’ Com-

pany and Union representatives. Mr.‘J. C. Hydrick, Vice

President and General Manager, announced the Company’s

intention of moving part of the Philadelphia operations to

Danville, Virginia (N. T. 160). Hydrick stated that no

to move to Danville (N. T. 162): In reply the question

hourly workers in the Philadelphia plant would be invited

@

14a Appendix C

‘whether hourly workers from Philadelphia would be hired

at Danville the answer was ‘‘yes’’ (N. T. 162). The Union

asked what rate would be paid to Philadelphia employees

who went to Danville and were hired. The answer was that

such workers would be paid the going rate for the Danville

area (N. T. 162).

The move to Danville was scheduled to begin between

August 15 and September 1, 1959, and was to be completed

within 60 to 90 days (N. T. 166, and Union Exhibit No. 11).

It was estimated that as a result of the Danville move

at least.350 employees at the Philadelphia plant would lose

their jobs (N. T. 297 and Joint Exhibit No. 14). .

On July 2, 1959, the Union was given a one page state-

ment, signed by J. C. Hydrick. This statement was entitled -

‘‘Himployee Assistance Plar for Employees Affected by the

Danville Move’’ (Joint Exhibit No. 15)... This plan pro-

vided the following payments ‘‘to maintenance and service

workers who are affected by the Danville move.and who will

be laid off between August 1, 1959, and March 1, 1960 and

who cannot be relocated at the Tacony plant by April 1,

1960 or pensioned within one calendar year from layoff

date’? (Joint Exhibit No. 15): :

1 week’s pay to employees with over 1 but less than 10:

years of service as of lay off date.

2 weeks” pay to employees with over 10 but less than

20 years of service as of lay off date.

3 weeks’ pay to employees with over 20 but less than

30 years of service as of lay off‘date.

4 weeks’ pay to employees with over 30 but less than

40 years of service as of lay off date.

5 weeks’ pay to employees with over 40 but less than

50 years of service as of lay off date.

Appenmns C 15a

°

Under date of July 17, 1959, Mr. Joseph Adair, Union

President, informed Mr. Walter Norton, Industrial Rela-

tions Manager, that-the Company’s proposal (Joint Ex-

hibit No. 15) had been considered by the Union Plant Com- -

mittee and that the Committee felt that the proposal was

‘‘unacceptable in its submitted form and content’? (Joint

Exhibit No. 17a).

~ Attached to the above cited Union letter of J ay 17, 1959,

was the Union’s ‘‘counter-proposal relating to Employees

Affected by the Danville Move.’’ This proposal entitled,

‘‘Union’s Proposal Relating to the Employees Affected by

the Danville Move’’ (Joint Exhibit No. 17b) provided:

1. All employees with up to 5 years service shall receive

1 week severance pay. .

2. All employees with Met's 5 5 years and up to 10 years

service shall receive 2 weeks’ severance pay.

3. All employees with over 10 years and up to 15 years .

service shall receive 6 weeks’ severance pay.

4: All employees with over 15 years and up to 20 years

service shall receive 10 weeks’ severance pay.

5. All employees with over 20 years and less than 25

years service shall receive 15 weeks’ severance pay.

6. a. All employees who have 25 years of service or

better and whose jobs are being discontinued due ‘to their

departments being moved to Danville, shall receive a Pen-

sion when they reach age 65 in accordance to the present

Pension Plan.

6. b. The Company may, if it so desires, fund this pro-

gram or buy it through an Insurance Company, or they may

put sufficient sums in escrow to meet these payments as they

fall due. |

Bs ot ay “Appendix C

6. e. All employees covered by 6-a above shall be given

a $1,000 paid up Life Insurance policy in accordance with

Section XIX ‘‘A’’ of the present agreement covering Life

Insurance. To be given at the time of lay off. _

Under date of July 30, 1959, the Union suggested to

Management that ‘‘To expedite the final resolution of this

grievance, the Union suggests that the Company and Union

by-pass Steps 1 and 4 inclusive of the Grievance Procedure

and that an Impartial Chairman be promptly designated to

hear and render a final decision on the described grievance’’

(Joint Exhibit 20).

Under date of August 10, 1959, Management helmed

the Union that ‘‘After careful consideration, the Company

has concluded that the matters which you refer in your let-

ter are not-arbitrable under the provisions of the current

union contract’’ (Joint Exhibit 22).

Under date of August 10, 1959, (Joint Exhibit No. 23) -

the Union filed a grievance signed by 127 union members. °

The grievance stated, ‘‘We believe that the Company’s

action in terminating our employment without making ade-

quate provision for us constitutes a misinterpretation, mis-

application and a violation of Article XX of the Agreement.

In addition, we are informed that the. Company and the

Union have been endeavoring te work out an ‘employee

Assistance Plan for employees Affected by the Danville

Move ;’ however, the Company has refused to discuss the

counter-proposal submitted by the Union, Therefore, since

a difference has arisen, we desire to have this grievance

likewise handled in accordance with Section IIT and Section

IV of the Agreement.’’ .*

Under date of August 28, 1959, Management informed

the Union that ‘‘The Company feels that the Pension clause

of our Agreement is so clearly written that the problem you

Appendix C ~ | 17a

present cannot be a violation; misinterpretation or misap-

plication of our Mbrcement, as your problem is not covered

by our existing Pension Plan thru arbitration. Under our

Agreement, this cannot be done.’’ ‘‘In addition, the Com-

pany’s ‘Employee Assistance Plan for Employees Affected

by the Danville Move’ is a broad labor policy and problem

not covered by our existing Agreement. As heretofore

pointed out, this is not a subject of arbitration’? (Joint Ex-.

hibit No. 26). . ine

The Union fhen took the issues to United States Dis-

trict Court for the Eastern District of Pennsylvania to

compel the Company to proceed to arbitration under a col-

lective bargaining agreement. The Union argued that the

Company, by refusing to process and arbitrate the pension

and severance grievances, was in violation of the labor

agreement. ‘The Company contended that the pension

rights, and severance pay, of employees laid off as a result

~ of the move to Danville, Virginia, were matters not compre-

hended -by the grievance and arbitration provisions of the

labor agreement. .

Under date of September 23, 1960, the following order

was issued by the District Court:

‘‘Defendant is hereby ordered to conform & comply

with Sections III and IV of the collective bargaining agree-

ment between itself and the plaintiff, to sélect an impartial

chairman and to submit-to arbitration, subject to the. pro-

visions of the Collective Bargaining Agreement, the fol-

lowing stated grievancés.

“1. Are the employees who are covered by the Collective

Bargaining Agreement and who were severed from em-

ployment as a consequence of the removal of a portion of

the Company’s operations to Danville, Virginia eligible for

pensions within the terms of Section XX of the Agreement?

18a Appendix C

. 2. Do the provisions of the Collective Bargaining

Agreement obligate the Company to provide: severance

benefits in respect of said severed employees and, if so to

whom and in what amounts shall such benefits be paid’’

(Union Exhibit 1, page 19a) ?

The Union appealed from the above cited order. The

appeal was not concerned with the merits of the opinion

and order of the District Court. but only with the nature |

and scope of the order (Union Exhibit 1, pages 2-3).

The Appellant (Union) contended that it was not the

function of a federal court to limit or define the exact nature .

_ of the issues to be presented to.an arbitrator under a labor

agreement. .The order of the District Court would not per-

mit the complete development of the Union’s position, nor

would it leave to the arbitrator the authority and discretion

_ In arriving at a solution and formulating a remedy which

the arbitration procedure under this collective bargaining

agreement gives to him (Union Exhibit 1, page 4).

The Appellee (Company) presented the following argu-

ments in support of the ordey issued by the District Court.

First, that the order was based on a firmly established prin-

ciple that it is the function of the court, rather than that of

the arbitrator, to determine arbitrability. Secondly, the Dis-

trict Court acted properly when it stated in its order what

-it found to be arbitrable. Thirdly, the District Court did

not err in directing the submission to arbitration of claimed

violations of the Collective Bargaining Agreement but not

ordering the submission to Arbitration of other matters in- .

volving changes in or additions to the labor agreement

(Company Exhibit 1, pages 4-10).

Under date of March 24, 1961, the United State Court

“of Appeals for the Third Circuit vacated the order of the

District Court and directed the lower court to enter the

following order :

Appendix C 19a

“And now to wit, this 24th day of March, 1961, it is

thereby ordered and decreed thatthe plaintiff’s motion for

Summary judgment in the matter be, and the same is hereby

granted, and that summary judgment is hereby entered in

favor of plaintiff, United S w, File and Steel Products

Workers of America, Federal, Labor Union No. 22254, AFL-

CIO and that defendant is hereby ordered to conform and

comply with Sections Hd and IV of the collective bargaining

_ agreement between itself and the plaintiff, to select an im-

partial chairman and to submit to arbitration, subject to the

provisions of the collective bargaining agreement, the griev-

ances with respect to pensions and severance pay insofar as

such grievances arise under the provisions of the collective

bargaining agreement constitute claimed violations. thereof.

Each party to bear its own costs on this appeal.’’

Under date of April 11, 1961, the United States District

Court for the astern District of Pennsylvania issued the °

above quoted order.

Union Posrtion.

Arbitrability

Both the District Court and the Circuit Court held that

_the Union grievance relating to severance pay was arbitra-

ble even though the labor agreement contained no provision

for the payment of severance pay. If the Arbitrator were

to refuse severance pay on the ground that the labor agree-

ment contains no provision with respect to severance pay he

would, in reality, be overruling both the District Court and

the Circuit Court (Union Brief, page 3). , :

With respect to the pension grievance the Company is

attempting to have the Arbitrator review the decision of

the District Court and the Circuit Court. Both courts held

the pension grievance to be arbitrable even though Section

XX-C—Eligibility—of the labor agreement provided that

oan

20a Appendix C

‘“Basic yearly pension allowance (without Social Security)

which shali be paid a retired employee who has reached the

age of 65 with at least 25 years of continuous service with ©

tle Company... .’’ If the Arbitrator were to deny .pen-

sions on the grounds that the labor agreement contains the

words ‘‘age of sixty-five with at least twenty-five years of

continuous service with the Company’’ prevented payment

of pensions to others, he would, in effect, be holding that

_ the Union’s grievance with respect to pensions was not

arbitrable. To so rule would be contrary to the decision

of the Courts that ‘this was an arbitrable issue to be heard

and decided by an Arbitrator (Union Brief, page 4).

~The Union’s grievances fall within Section III—Ad-

justment of Grievances, Section A, which provides ‘‘Or

should any grievance arise between the parties hereto... .’’

Severance Pay

1. The Union is not asking the Arbitrator to write a

severance pay clause to be inserted into the existing labor

agreement. It is requesting the Arbitrator to resolve the

severance pay grievance which it filed and which has been.

held by the Courts to be arbitrable. Since the courts have

held that severance pay is a grievable issue the task of the

Arbitrator is to decide the amount of severance pay (Union:

Brief, pages 17-18). )

2. The District Court held the previous —

and withdrawals of requests for severance pay by the Union

did not constitute an estoppel of the Union’s alleged griev-

ances involving severance pay (Union Brief, page 18).

3. The Union did not withdraw its request for sever-

ance pay for the terminated employees when the Septem-

ber, 1959 labor agreement was signed. The Union made it

very clear to the Company that the severance pay request

A ppendix C 21a

was not being abandoned or withdrawn even though the

September, 1959 labor agreement did not contain a sever- ~ °

ance pay provision (Union Brief, page 18).

4. The Company admits that it granted severance pay

to fifty-one salaried employees who were terminated by the

plant move (Union Brief, page 20). ‘

Fifty-one salaried employees were paid $33,544.76. Ap-_

proximately four hundred ‘hourly workers were offered

approxiraately $60,000 to be distributed in the manner set

forth in Joint Exhibit 15. The Union states that ‘‘the in-

equity and injustice of Porter’s offer is clearly obvious’?

(Union Brief, page 20).

The a of severance pay to the salaried workers

shows thet ‘‘severance pay is neither new nor abhorent to

Porter’’ (Union Brief, page 21).

5. The Union’s request as to severance pay as set forth

in Joint Exhibit 17-b, is both equitable and fair (Union

Brief, page 24).

6. Porter has presented no real defense to the sever-

ance pay grievance.. Porter cannot claim that it is unable to

pay, therefore it has no financial defense (Union Brief,

‘ page 37).

7. Porter has no defense, economic, moral, or social,

against a claim for severance pay by employees who have

given faithful and able service and who have been sum-

marily cut off by the unilateral action of the Company in

moving seventy to eighty per cent of the Departments to

Virginia (Union Brief, page 38).

Pensions .

1. The Courts have decided that the pension grievance

is arbitrable. The task-before the Arbitrator is to decide

the pension grievance on its merits (Union Brief, page 39).

la

22a - Appendia ¥4

_ 2. Porter agreed in 1956 to continue the pension plan

negotiated between the Union and Henry Disston & Sons,

Inc., and not mérely to continue to make pension payments

(Union Exhibit 2, page 2, Pension) (Union Brief; page 39).

3. The 1950 contract between Disston and the Union

(Union Exhibit 3) contained the wurds ‘‘who has reached

the age of 65 with at least 25 years of continuous service,”’

.and also the words ‘‘Problems on eligibility within the

terms of this pension plaia that cannot be solved by the Pen-

sion Committee shall be the.only pension problems subject

to Arbitration,’’ have continued to be a part of the labor

agreement up to and including the eo 1959 Agree-

ment (Union Brief, page 40).

4, Union exhibits 4aa to 4vv show that over the years,

both ellie Disston and under Porter, employees have re-

ceived pensions despite the fact that they did not literally

and strictly meet the words of Section XX, Pensions, of

the labor agreement (Union Brief, page 41).

8. It has, since 1950, been understood that tne Pension

‘Board was not the final authority. If problems of eligibility

could not be settled the Union had the right to process them

through the grievance procedure to arbitration (Union Ex-

hibit 10; Union Brief, page 42). That this procedure has

been follewed is indicated by the fact that a problem of |

eligibility was submitted to arbitration i in 1950 (Joint Ex-

hibit 28).

6. The Union-Management Pension Committee did not

construe breaks in employment caused by the ieseg as

a break in ‘‘continuous service with the Company” (N.

page 258 ; Union Brief, page 45).

- 7. The Union-Management Pension Committee and the

Pension Board gave weight to the closing down of a depart-

Appendix C 23a

ment in its decision as to whether to grant pensions (Union

_ Exhibits 4r ; 4c; 4dd; 4ee; 4gg; 4p0; Union Brief, page 47).

The purpose and intent of Union Exhibits 4aa to 4vw

inclusive are.to show that the section relating to pensions

has never been interpreted and applied so literally as to cut

off employees on the basis of words. On the contrary, the

. section dealing with Pensions has always been interpreted

and applied to allow weight and relevancy to be given to

such factors as ‘‘the depression,’’ ‘‘long years of service’’

and ‘‘department shutdown.’’ For the Arbitrator to give

weight and materiality to the factor of the ‘‘removal of”

seventy to eighty.per cent of the departments”’ in resolving

the ‘‘problem of arbitrability’’ which is now before him, and

to grant pensions, would be proper and just, and in line with

what the parties themselves have done, on occasions in the

‘past (Union Brief, pages 47-48).

8. With respect to pensions there are 3 groups:

a. Those terminated employees who have rendered

twenty-five years or more of service but had not yet reached

age sixty-five at the time of termination (Union Brief, page

52). Pensions as a fringe benefit, are negotiated payments

for service, i.e., for years of service. Pensions are not paid

because an employee has reached a certain age. For the

Company to emphasize ‘‘age sixty-five’’ is to unjustly with-

hold from an employee his pension which. he has earned

(Union Brief, pages 56-57). This group is entitled to full

pensions.’ -

b. Those terminated employees who were sixty-five

years of age but had not yet put in twenty-five years of

service at the time of termination. Since Porter has made

it impossible for these aged employees to continue to work

it should not be allowed to profit by its unilateral action in

‘severing these workers. :

24a A ppendix _

c. Those employees who had not reached age sixty-five

and had not yet put in twenty-five years of service.

_ The Union holds that an equitable formula on a pro rata

basis can and should. be worked out for these employees

(Union Brief, page 58).

Summary

An equitable pension plan could be worked out on a pro

rata basis between the Company and the Union. If the par-

ties failed to reach an agreement then the Arbitrator could

‘ prescribe an equitable formula (Union Brief, pages 57-58).

1. Both grievances have been held by the Courts to be

arbitrable, therefore, it is not the function of the Arbitrator

to determine arbitrability. His task is to decide the griev-

_ ances on their merits. ©

2. The Union’s full request as to severance vay should

be granted.

3, The Union’s position with respect to the. treatment

of the three groups on so matter of pensions is set forth

above.*

4. The Arbitrator’s opinion and award in this case are

of tremendous importance.

Among the measures that can be used to mitigate the

effects of automation, movement of plants and changes in

- production methods; are the granting of severance pay and

an expanded approach to pension plans (Union Brief, pages

60- 61).

In rendering his opinion and award the Arbitrator

should give weight to industraal common law and apply it

by taking into consideration the economic suffering occa-

sioned by the plant removal to another location.

Appendix C 25a

Company Position.

Arbitrability

1. The order of the U. S. District Court as ‘revised by

the mandate of the Court of Appeals for the Third Circuit

is significant because it directed arbitration :

a. subject to the provisions of the Coltebtive Bargain-

ing Agreement

b. of the grievances with respect to pensions and sev- :

- erance pay e

c. insofar as such grievances arise underthe provisions

of the collective bargaining agreement and -constitute

claimed violations there (Company Brief, pag@® 22-23).

The Court did not interpret any specific contract pro-

vision, nor did it decide the merits of the controversy. Nor

did the Court hold that the Company was to be deprived of

the benefits of any contract limitation. or provision. «In

effect the Court said let the Arbitrator, within the limits of

the labor agreement, make a determination on the matters

. presented to him (Company Brief, page 23).

2. The Court order directed arbitration ‘“subject to

the provisions of the Collective Bargaining Agreement in-

sofar as the grievances arose under tle provisions of the

agreement and constitute claimed violations thereof.’? This

language places the burden on the Union to prove that the

grievants are entitled to pensions or severance pay because |

of some contract provision.’’ (Company Brief, page 23).

3. Section IV-B. of the labor agreement provides that

neither party will submit to arbitration either broad-labor

policies or. plant-wide wage adjustments. ‘It was not the

purpose of the Court to issue a binding ruling that the issues

.

“oper

.

s SIRI URYE OR EON

/

of severance pay arid pensions were or were not broad labor

policies. The Court said that the question of whether these"

were broad labor policies and therefore not arbitrable was

to be decided by the Arbitrator (Company Brief, page 24).

The purpose of the words ‘‘broad labor policy’? were

included in the labor agreement in order to limit and qualify

the broad. general language of Section II B-5, and Section _

‘ III-A, insofar as arbitration of broad labor policies is con-"

cerned. A broad labor. policy is one which affects a sub-

stantial portion of the labor force (Company Brief, page 25).

26a Js Appendix C

4. When it became apparent to the Union that the-Com-

pany would not agree to the Union’s proposals with respect —

to\pension and severance pay the. Union decided to go to

arbitration. These proposals clearly involve matters of

policy not provided -for in the existing contract. They were

matters of broad labor policy and were not intended to be,

nor are they arbitrable (Company Brief, page 26).

3. The Arbitrator has no power to add to, subtract from,

or modify the contract provisions.

Section XXII-B, provided that ‘‘any séction (or. part

thereof). of this Agreement may be added to, amended or

rescinded only by mutual agreement between the parties

hereto. Such additions, amendments, or rescindments shall

be effective from the date.they are jointly agreed to.and

signed,”? ete. *

The above language means that the only way thé con-

:; tract can be modified is by mutual agreement of the signa-

.tories. In effect the above provision prevents an Arbitrator

from writing, rewriting, adding to or subtracting from any

_ part of the labor agreement (Company Brief, page 26).

An Arbitrator is not empowered to alter’ a. contract

» under the guise of construction. In the present case the —

_ Union is endeavoring to secure by arbitration what it -was

unable to get by negotiations.

Appendix C ' 27a

Pensions

-

_ «& .

7, The parties have contractually limited arbitratton

with respect to pensions to prenreme of eligibility within the |

terms of the plan.

Section XX- B, of the labor agreement provides : ‘‘ Prob-

lems of eligibility. within the terms of this pension plan

that cannot be solved by the Pension Committee shall be

the only pension problems subject to arbitration.’? This

provision shows a clear and unambiguous restriction of the

- Union's right to arbitrate an extension or modification of

the Pension Plan. This provision expressly deprives the

Arbitrator of jurisdiction over the pension grievance.

The. next paragraph, Section XX-C, Eligibility, pro-

vides for the basic yearly pension allowance which shall be

paid to a retired employee who has reached the age of sixty-

five with at least twenty-five years of continuous service

with the Company (Company Brief, page 31).

2. The demand for pensions for laid-off sbi who .

can’t meet the service and age requirements of the plan is

not a subject of eligibility ‘‘within the terms of the plan.’’

In order to grant pensions to such employees the Arbitrator

’ would have to disregard the age and service requirements

of the plan (Company Brief, page 32).

3. The word “‘hardship’’ (Section XX-J ) refers to

financial hardship which results from an employee’s s physi-

cal disability. The labor agreement contains no broad gen-

eral provision for pensions in hardship cases (Company

Brief, page 35).

4. In the summer of 1956 Porter closéd down the steel

plant and armor plate department. This closing resulted

in the laying off of 400 employees. No demands were made

me ng ope ag Pe ro

a

. . - a

28a | Appendix C

by the Union that pensions be granted to those who did

not qualify under the provisions of the labor agreement.

The exceptions were four employees who were near retire-

ment, and were not eligible. Special arrangements were

worked out in the 1956 negotiations to permit these em-

ployees to work until they could meet the requirements of

65 years of age and 25 years of continuous service. Since

these four cases no exceptions have been made to 65-25 re-

quirement. With the negotiation of the first labor agree-

ment by Porter, in 1956, there ‘‘was a complete change of

policy to which the Walon never excepted.’’ (Semmens Brief, ©

pages 36-37). ”

5. The contract which become effective September 15,

1957, provided for a clear contractual separation of the

Disston Pension Plan from the Porter Pension Plan. Under

this agreement the Porter Company agreed to continue

_ pension payments due under the Disston Plan, but it did.

not agree to continue the Disston Plan.

In 1957 Porter agreed to provide its own Pension Plan

which would be administered by the-Management General

Pension Board, Henry Disston Division. The Porter Plan,

which was in effect in 1959, while substantially the same in

substance was administered by different people under dif-

ferent policies (Company Brief, pages 37-38).

6: Mr. Hydrick clearly explained the pension policy

which was in effect in 1959 when he informed the Union

- that the Company would abide by the contract provisions

but that it had no intention of altering the existing pension

plan. Those who were on pension would continue to receive

it, andghose eligible for pension within one year of lay-off

would receive their pension.

The Company has, without exception, followed this

pension policy. It is contended by the Company that there

-Appendia C ) 29a

' is no foundation for the Union’s attempt to have placed

upon the Company a pension obligation greater than the

Company bargained for because of am alleged practice in

which H. K. Porter did not participate and which it’ dis-

continued (Company Brief, page 38). .

Severance Pay

1. The labor agreement contains no provision relating

to severance pay. Consequently, the Union’s demand for

severance pay cannot constitute a claimed violation of any

such provision (Company Brief, page 39). 3

; 2. The only way in which the Union can secure sever-

ance pay for the workers involved would be for the Arbi-

trator to write a severance pay provision. In doing this the

- Arbitrator would be amending and supplementing the labor

agreement which specifically provides that this can be done

only by mutual agreement of the parties. In altering the

contract the Arbitrator would be substituting his judgment

for the negotiating talents and knowledge of the parties

(Company Brief, page 39).

3. Past events clearly indicate that the Union recog-

nizes the force of the-Company’s arguments. ..The Union

presented a severance pay proposal in the wage reopening

negotiations of January, 1959, but withdrew the proposal. -

* In July, 1959, the Company offered the Union an ‘‘Km-

ployee Assistance Plan’’ which was rejected by the Union.

This shows that it was the intention of the parties to formu- ©

late a severance pay provision through the process: of col-

lective bargaining. It was intended, as a reading of the

grievance will show, that’ the subject of severance pay

should be a negotiable issue, not an arbitrable issuc (Com-

pany Brief, page 40).

30a, 7 Appendix C

4, The Union argued that since the Company had of-

' fered severance pay the Arbitrator would not be writing

anything into the contract. that had not already been offered

by the Company.

The Company points out that an offer alone, particu-

larly if the offer has been refused, is not sufficie lter

the terms of contract. A party. cannot ebiegt deg

then later claim the benefit of the offer (Company pret)

pages 40-41).

Summary

1. The Company has clearly shown that the Union’s

grievances are not arbitrable under the contract (Company .

Brief, page 42).

2. The a y has demonstrated’ that the Union has

been unsuccessful in proving that the grievances arose un-

der the provisions of the labor agreement and that the

grievances constitute claimed violations of the silences

(Company Brief, page 42).

3. In Joint Exhibit 1, the Union states that the Com-

pany, by refusing to bargain on the Union’s counter pro-

posal with respect to severance pay, was in violation of the

National Labor Relations Act. However, the Union did

‘not file an unfair labor practice charge against the Com-

pany. The Union did not file such a charge because the

record shows that the Company offered by letter io discuss

* the subject and was-also available and willing to discuss

the matter in the September, 1959, negotiations. The Union

was the party that refused to bargain (Company Brief,

pages 42-43). :

Appendix C 3la

4. With respect to pensions the Union does not claim

that the employees involved possessed any vested rights

to receive pensions under the Pension Plan. In this arbi- —

tration proceeding the Union is demanding that these work-

ers should be given some kind of vested rights, to be

determined by the Arbitrator. If the Union had claimed

that pension rights were vested it could have taken the

matter to Court (Company Brief, page 43).

5. At no time during the arbitration hearing did the

Union claim that this had been the case of a runaway shop,

or that the Company had acted im bad faith.

Everything that the Company did in connection with

the move to Danville, Virginia, was done frankly and openly :

(Company Brief, pages 43-44). | :

‘6. When the negotiations were begun for the contract,

which became effective September 15, 1959, a considerable

number of those wh6 would be affected by the Danville move

were still working. It was the responsibility and duty of

the Union to ‘represent these workers. The minimum.

monthly pension was increased and the severance pay was

withdrawn. ‘‘The Union bargained for those people: who

were to remain in the employ of the Company at Tacony,

but insisted on arbitration for those who had left and were

to leave.’’ (Company Brief, page 45).

7. The presence of pension provisions in a labor agree-

ment is not a guarantee that every employee will receive a

pension. The reduction of work because of marketing

changes, technological changes, and economic conditions,

is a constant threat to the continuation of employment

until the time when an employee has met the age and length

of service requirements of a pension plan (Company Brief,

page 46). ‘

,

o2a Appendix C

ARBITRATOR’s OPINION. °

Introductory Remarks

Inasmuch as the federal court ruled that the grievances

with respect to pensions and severance pay are arbitrable

the arvitrator is relieved of this duty.

The functions of an arbitrator are: (1) to determine the

arbitrability of an issue if the parties request such a deter-

mination; (2) to determine ‘facts and past practices; (3¥ to ™

weigh the facts and determine the-significance of past prac-

tices; (4) to interpret the contract; (5) to arrive at an

award. | |

Attention is directed to the fact that an arbitrator may

rule that a grievance is arbitrable but he may deny the

remedy or claim sought by the grievant. For example an

arbitrator held that whether the employer had the right to

retire an employee for age was an arbitrable issue under a

labor agreement which defined a grievance as any dispute

involving the interpretation, application, éte. of the contract

and which allowed the arbitration of any and all grievances

so defined. However, in his award the arbitrator upheld the

right of the Company to unilaterally establish a compulsory

retirement age for all employees, where the labor agreement

is silent on the subject. (General Aniline and Film Cor-

poration, 25LA50.) Similarly an arbitrator held that the

Union’s protest against the employer’s removal of the nurse

from duty on the second shift was arbitrable. However, in

his award the arbitrator held that the Company did not vio-

late the labor agreement by removing the nurse from the

seeond shift (Minneapolis-Honeywell, 28LA150 (1957).)

Attention is also directed to the fact that while courts

hold that it is their function to determine arbitrability, they

do not direct the arbitrator as to what award he shall arrive

at. In the Warrior and Gulf Navigation Case, Justice

Appendix C 7 ' 33a

Douglas stated that ‘‘The Court should view with suspicion

any attempts to persuade it to become entangled in the con-

struction of the substantive provisions of a labor agree-

ment.’’ Justice Douglas also pointed out that: ‘‘Whether

- contracting-out in the present case violated the agreement is

the question. It is a question for the ar bitrator, not for the

courts’’ (United Steelworkers v. Warrior and Gulf Naviga-

tion Company, 363 U. S. 575 (June 20,1960)). In the Amer-

ican Manufacturing Company case which was decided on the

Same day as the Warrior and Gulf case Justice Douglas

stated that ‘‘Whether the moving party is right or wrong is"

a question of contract interpretation for the arbitrator.’

Justice Douglas pointed out that ‘‘The Courts, therefore, ne

have no business weighing the merits of the grievance, con-

sidering whether there is equity in a particular claim, or de-

termining whether there is particular language in the writ-

ten instrument which will support the claim.’’ In his. con-

eluding statement Justice Douglas stated that ‘“When the

judiciary undertakes to determine the merits of a grievance

under the guise of interpreting the grievance procedure of

collective bargaining agreements, it usurps a function which |

under that regime is entr usted to the arbitration tribunal’’

(United Steelworkers ‘v. American } Manufacturing Com-

pany, 363 U.S. 564 (June 20, 1960)). These decisions seem

to make it clear that major role in the arbitration process

is not to be played by the courts, but by the arbitrators

* selected by the Union and Company.

The above discussion as to the difference phos the

arbitrability of a grievance and the decision reached by the

arbitrator with respect té upholding or denying the griev-

ance, arises out of certain statements which are contained i in

the Union’s brief. The Union states that: ‘‘for Arbitrator

Buckwalter to deny severance pay on the ground that there

is no provision in the applicable labor agreement providing

melee: &

34a | Appendix C

for severance pay is, in reality, a holding that the grievance

- as to severance pay is not arbitrable’? (Union Brief, page

3). In effect the Union is saying that since the Court has

ruled that the severance issue is arbitrable, therefore the

Arbitrator must rule in favor of the Union with respect to

the severance issue. The above cited decisions of the United

States Supreme Court clearly indicate that while it is the ©

function of the Court to determine the arbitrability of a

grievances, it is not the Court’s function «to determine

_ whether the grievance shall be upheld or denied: On page 5

of its brief the Union states that “‘Sinee it was for ‘the

Courts, by Porter’s own admission, to decide on ‘arbitra-_

bility’ Arbitrator Buckwalter should not, either directly or .

indirectly overrule the Courts, but should agree that: both

grievances are arbitrable.’’ The Arbitrator does not ques-

tion the Court’s ruling as to the arbitrability of the two

issues in the instant case. However, after having studied -

the facts and ar guments presented by the parties the Ar-

bitretor.is not bound to rule in favor of the grievant. |

Let us examine the opinion of Justice John W. Lord,

Jr., of the United States District Court for the Eastern

District of Pennsylvania. The Court stated that ‘‘As a

matter of law, however, the Court determines that the

pleaded withdrawal of. severance pay. demand would not

work an estoppel as to plaintiff’s alleged grievance involv-

ing severance pay... .’’ (Union Exhibit No. 1, page 14a).

It is the arbitrator iy view that this statement cannot reason-

ably be construed. to mean that the Arbitrator must rule in

favor of the Union’s grievance with respect to severance

pay. Justice Lord states with respect to ‘‘broad labor poli-_

cies’’ Section IV-B, of the labor agr eement) that ‘‘If con-

- tracting work to patel ‘plants was not a function of man-

agement, it seems evident that the present disputes are not

exempt from arbitration’as ‘broad labor’ policies’’ (Union

Appendix C | 35a

Exhibit No. 1, page 17a). Here again it, seems clear to this

Arbitrator that the,Court is saying these issues, severance

pay and pensions, must be submitted to an arbitrator, but

_ the Court is not directing the Arbitrator aS to whether he

should grant or deny the relief sought by the Union.

In rendering his‘ award the Arbitrator is bound to be

‘guided by the following injunction expressed by Justice

Douglas in the Enterprise‘Wheel and Car Corporation case:

‘‘An arbitrator is confined to interpretation and applica-

tion of the collective. bargaining agreement; he does not sit

to dispense his own brand of industrial justice. He may

_ of course look for guidance from many sources, yet his

award is legitimate only so long as it draws its essence from

the collective bargaining agreement. When the arbitrator’s

words manifest an infidelity to.this obligation, courts have -

no choice but to refuse enforcement of the award’’ (United

Steelworkers of America v. Enterprise Wheel and Car Cor-

poration, 363 U. S. 593 (1960) ). | a

-, Attention is directed to the wording of Judge Lord’s

order. dated April 11, 1961, directing the Company ‘‘to sub-:

mit to arbitration, subject to the provisions of the Collective

Bargaining Agreement, the grievances with respect to pen-

sions and severance pay insofar as such grievances arise

under the provisions of the -Collective Bargaining Agree-

ment and constitute claimed violations thereof’’ (Emphasis

supplied). In the rendering of his award the Arbitrator

must, therefore, keep in mind that according to the Court’s

order he can rule on these matters to the extent that they

arise under provisions of the agreement and to the extent

that provisions of the contract. have been violated.

Pensions

_ The Demand for Arbitration with respect to pensions

_reads: ‘‘The Union grieves that the Company has misinter-

preted and misapplied Article XX of the Agreement insofar

Bs

ef

@

a

36a Appendix C

as the Eligibility for pensions of the employees affected

by the Company’s movement to Danville, Virginia is con-

cerned.”’

Section XX, Pensions, Paragraph C, Eligibility, Sep-

tember, 1957 contract, provides: ‘‘Basic yearly pension al- .

lowance (without Social Security) which shall be ‘paid a

retired employee who has reached the age of sixty-five with

ft least twenty-five years of.continuous service with the

Company....’’ (Joint Exhibit No. 2). sie

The tutvedusteey paragraph to Section XX, Pensions,

provides that: ‘‘The Company agrees to continue pension

payments as negotiated September 1, 1950, February 4, 1952,

and July 15, 1953, with its predecessor Henry Saito &

“Sons, Inc,’’:( Joint Exhibit Na; 2).

The labor agreement dated August 16, 1950, effective

September 1, 1950, provides the following with respect to

pension eligibility: ‘‘Basic yearly pension allowance (with-

out Social Security) which shall be paid a retired employee

-who has reached the. age of 65 with at least 25 years of con-

tinuous. service with the Company. .. .’? (Union Exhibit

No. 3).

The Arbitrator directs attention to the significant fact

that above cited clauses, with respect to eligibility, are the

- same in both the 1950 and 1957 labor agreement.

The Memorandum of Agreement, dated September 1, |

1956, and terminating September 15, 1957, between the—

Henry Disston Division of the H. K. Porter Company, Ine.

- and the Union provides that: “The Company will continue

the pension plan negotiated between the Union and Henry

Disston & Sons, Inc. except for the following changes”’

(Union Exhibit No. 2, page 2). No change is mentioned

with respect to the 25-65 provision.

Attention is directed to the fact that the Sappleaneiital

Agreement, dated September 15, 1958, and eunning to Sep-

Appendix C 37a.

tember 15, 1959, sani no change in Section XX (J oint

Exhibit No. 3). |

It is well accepted that a pension is paid ecu be-

cause of years of service and not because an employee -has

attained acertainage. *

Justice Douglas, in the Gulf and Warrior Case states

that: ‘The labor arbitrator’s source of jaw is not confined

to the express provisions of the contract, as the industrial

common law—the practices of the industry and shop—is

equally a part of the collective bargaining agreement al-

though not expressed in it.’’ Let us now ‘urn to the ‘law

of ihe shop,’’ the actual practice followed in the Tacony :

plant with respect to the determination of pension eligibility.

‘A study of the exhibits submitted at the Arbitration

hearings indicates that in numerous casés over the years, it

was the practice of the.Pension Board to abide by the spirit

of the eligibility clause, rather than *by the wording of the

clause. “If the Pension Board had adhered literally to the

letter of the provision it would have turned down a number

of requests for pensions.

Although James Rose. and Frank iiitimey did not

have 25 years of continuous servicethe Pension Board, in

January, 1951, granted them pensions on the grounds that.

‘*special consideration was given in these cases because of

the long period of total employment’’ (Union Exhibit 4c).

The Pension Board made this decision in spite of an arbitra-

tion award, made shortly before, which denied the Union’s

- request that Rose & McKinney were eligible for pensions

(Joint Exhibit No. 28).

In August, 1951, the Pension Board ecu the pen-

sion of Edward Riley over and above the eligibility as deter-

mined by the Union-Management Pension Committe. This

increase was made because of Riley’s ‘‘exceptionally long

total service with the Company” (Union Exhibit 41). Simi-

/

38a Appendix C |

lar action was taken by the Pension Board in April, 1951,

with respect to Peter McKenna (Union Exhibit No. 4h).

' Likewise in 1953 the Pension Board increased the pension of

George Jackson and William Robinson, because of long serv-

ice with the Company (Union Exhibit No. 4p).

In December, 1951, the Pension Board granted a pen-:

sion to Fred Zitkovitz. The Board stated: ‘‘Mr. Zitkovitz

has broken service and does not qualify for a pension under

- the 25 years continuous employment provision. The Board,

however, has made an exception in this case’’ in view of the

37 years accumulated service and also in view of his age”’

¢ (Union Exhibit 4k).

In March, 1952, the Pension hinek ‘‘took some recogni-

tion of the eleven years of service of Richard Gundelswiler

prior to his break in service of approximately 2% years,”’

and increased his pension (Union Exhibit No. 41).

. ‘In 1953, Frank Snyder and Thomas Bamford, who had

been declared ineligible for a pension, were awarded pen-

sions because of the length of the employees’ service (Union

Exhibit Nos. 4t, 4w). Snyder was 62 when he applied for a

pension. He had a total of 44 years of service, 20 of which

was continuous service (N. T. 268). Bamford was 58 when

he applied for a pension. He had 41 years of continuous.

service (N. T. 268).

In June, 1955, Ivins Errickson, who had been declared

ineligible for a pension, was given a pension ‘because of his

unusually ‘long service’ ’’ (Union Exhibit No. 4m),

Although employee George Southwell had a break in

service of approximately 3 years in the early 1930’s, the

Pension Board, in February, 1956 awarded him a ‘‘special

grant”’ of $75.00 per month, ‘because of his long total serv-

_ ice with the Company.’’ (Union Exhibits Nos. 4pp and

4qq). Similarly in 1956, Harry J. -Mason and William

Pritchard were each awarded ‘‘a special grant’’ because of

Appendix C °° 39a

long total service with the Company. Mason received $40.00

per month, and Pritchard received $50.00 per ‘month (Union

Exhibits Nos, 4ss and 4uu). °

With respect to the depression of the 1930’s, Mr.

Wilderman asked Mr. Norton, Personnel Director, the fol-

lowing question: ‘‘Are you aware as to whether or not Dis-

ston made any exceptions in somie cases involving people

whose employment was:affected by the depression?’’ (N. T.

258). -Mr. Norton replied: ‘‘My predecessor told me that

breaks caused by the depression.generally were not consid-

ered as a break by the Union-Management Conimittee’’ (N.

T. 258). Norton testified that Harry Higham had 37 years . °

of service, but only 9 years o£continuous service prior to his

application for a pension in 1950. His application was de-

nied but subsequently he was granted a pension (N. T. 259).

_ Henry Schneider who had 43 years of service, 2144

years of which were continuous, applied for a pension at

. age 68 (N. T. 278). However, in spite of his being ineligible

under the 25-65 rule, the Pension Board granted higda $35.00

_ monthly pension in 1954, ‘‘Because-of his being affected by

the closing of the File Company and 1s long’ total service

with the Company.’’ (Union Exhibit No. 4gg).

Mr. Juram’s letter of July 22, 1954, indicated that one >

of the reasons why special action was taken by the Pen-

sion Board in behalf of George Hermanowicz and Leonard

Hutchinson was the fact that ‘their retirement is influenced

by curtailment of File Shop Operations.”’ ( Union ve

No. 4dd).

Mr. Juram’s letter of July 22, 1954, indicated that one

of the reasons why special action was taken. by the Pension

‘Board in behalf of Elmer Dutcher was the fact that ‘‘his

retirement is influenced by the curtailment of Cold Rolling

Operations.’’ (Union Exhibit 4ee). |

In December, 1951,.the Pension Board approved a pen-

sion for Robert Kessler who was only 46 years of age. The |

PATON Rr POUNCE P EF "

.

iM

40a A ppendia C

Board stated that ‘‘Mr. Kessler is only 46 years of age, how-

ever, the Board gave due consideration to his service of

- elose to 30 years and in view-of his present physical dis- —

‘ability approved a pension of $55.00 per month.’’ (Union

Exhibit No. 4k). The Arbitrator directs attention to the

fact the labor agreement in effect at that time provided for

- pensions for employees who had reached the age of 65 with

at least 25 years of continuous service, and for employees

who had 30 or more years of continuous service with the

company and who had reached the age of 60. Attention is .

directed to the fact that Kessler fell into neither of these

categories (Union Exhibit No. 3). Although the agreement

then in effect (Union Exhibit No: 3) contained no provision

with respect to special consideration in cases of physical

disability and hardship, nevertheless the Pension Board saw >

fit to give weight to his physical disability in arriving at its .

decision to grant him a pension. |

Let us again.refer to the Warrior and Gulf Navigation

case in which Justice Douglas pointed out that the source

of the Arbitrator’s law includes not only the express‘ pro- .

visions of the labor agreement but also the practice of the

shop (‘‘industrial common law’’). Examination of the

decisions of the Pension Board over a span of several years |

clearly indicates that it was the practice of the Board to

‘abide by the spirit, not the letter, of the eligibility clause.

The Board followed a very humane and social approach in

handling cases where there was doubt as to eligibility. In

numerous instances where an employee had less than 25

years of continuous service a pension was granted because

‘<special consideration was given because of the long period

of total employment.’’ Instances were cited of pensions

being granted where the workers (Snyder and Bamford)

liad not met the age requirement but had long total service

(44 years and 41 years). The Personnel Director, Mr.

Appendix C | 4la

Norton testified that breaks in service caused by the 1930

depression were generally not construed as breaks. In

several instances the closing of a shop or the curtailment

of the operations of a shop was a factor in influencing the

decision of the Pension Board. In one instance a pension

was given because of physical disability, to an: employee

who was only 46 years of age. This was done in spite of

the fact that the labor agreement made no provision for a

pension beéause of physical disability.

The fact that the Pension Board granted pensions to

2 employees who had been declared ineligible by an Arbi-

trator seems to clearly indicate a practice of broad and

understanding application of the eligibility requirement.

It is the view of the Arbitrator that the various cases

cited above, as well as others set forth in the transcript,

clearly indicate that the Pension Board applied a broad,

rather than narrow, concept of eligibility. The Company

argues. that it is not bound by what was done by the Board

prior to labor agreement of September 1, 1956 (Union Ex-

hibit No. 2). However, this agreement provides that the

H. K. Porter Company will continue the pension plan nego-

tiated between the Union and Disston. If we accept Justice

Douglas’ view tliat the collective bargaining agreement con-

sists of the written provisions of the contract plus the prac-

tices of the shop then one must conclude that H. K. Porter

is bound by the practice followed by the Pension Board,

prior to 1956, with respect to eligibility. ,

The essence of the Union’s position with respect to pen-

sions is: (1) failure of numerous workers to qualify under

the eligibility provision of Section XX, because of the meve

to Danville, will inflict upon these terminated employees a

severe and permament economic loss; (2) the past practice

over several years had been, in numefous. exceptional or

hardship cases, such as the instant case, to relax the precise

written eligibility requirement.

CHAO REY SRNR

42a - Appendix C

The request of the Union for pensions for those who,

at the time of their termination because of the Danville

move, had completed | 25. years of service but were not 65,

_and for pro rata pensions for those who were 65, but had -

not completed 25 years of service, seems entirely reason-

able and in line with earlier decisions of the Pension Board.

_ Surely if breaks in service during the depression of 1930

were overlooked, and surely if in 1954, a worker with 2114

years was given.a pension because~ of the closing of the

File Company, it would not be violating past practice in

‘this plant for the Arbitrator to grant the Union’s request.

Nor would the Arbitrator be adding to the collective bar-

gaining agreement since he would not be going beyond past.

practice with respect to the errs of eligibility for

pension.

Employees who at the time of their termination had not.

completed twenty-five years of service and had not reached

age sixty-five, are not entitled to a pension. A study of the

period from 1950 to 1956 does not indicate that it was the

practice to grant pensions to those who had not completed

a total of twenty-five years of service and had not reached |

age sixty-five.

Long before Justice Douglas emphasized the practice

of the shop (‘‘industrial common law’’) .as a part of thé

collective bargaining agreement arbitrators gave weight to”

past practice in interpreting the meaning of’a contract pro-

vision. Arbitration files are replete with awards which were

arrived at chiefly on the basis of past practice.

The Arbitrator rules that:

1. Each employee who, at the time he was terminated,

had completed twenty-five years of service or more, but had

- not reached age sixty-five, shall be paid full pension.

The formula for payment to be worked out by H: K.

Porter Company and the Union. —

Appendiz C - | | 48a

Each terminated employee shall receive a $1,000 non-

contributory life i insurance policy as provided for in Sec-

tion XITX-A.

2. Each employee who, at the time he was terminated:

had reached age sixty-five, but had not completed twenty-

five years of service shall be paid a pro rata pension based

on an equitable formula ta be worked out by H. K. Porter

Company and the Union.

Hach terminated employee shall receive a $1,000 non-

contributory life insurance policy as provided for in -Sec-

tion XIX-A.

.3. The request for pensions for employees who, at their

termination, had not yet reached age sixty-five and who had

not put in twenty-five years of-service is denied.

*

Severance Pay

On page 123 of the bails of the hearing the Union

" states: ‘‘If the Arbitrator is of the opinion that a proposal _

once made and a counterproposal made in reply thereto fall

by the wayside where no agreement is reached, then our

position is that pensions are one thing, severance pay is

another.”’ ‘

With respect to severance pay the Union’s case is, in

the opinion of the Arbitrator, much weaker than is its claim

for pensions. - No provision has ever been included, with

respect to severance pay, in any labor agreement between

the parties. Even the September, 1959, agreement, which

was signed after the dispute arose concerning severance

pay for the terminated employees, contains-no provision

for severance pay. True, the subject of severance pay had

been discussed in previous negotiations, and a proposal and

counterproposal were made with respect to those terminated

by the Danville move, but no agreement was reached.

44a Appendix C

‘In the case of pengions we have a certain pattern of

past practice. However, in the case of severance pay no

evidence was introduced to show that the Company has ever

paid severance pay.

Examination of: court and arbitration cases involvi ing

severance pay indicate preponderantly that where courts

and arbitrators have granted severance pay there has been

a severance pay provision in the labor agreement (e.g.,

Adams v. Jersey Central Power; 36LRRM2396, 37LRRM

2691; Bell Telephone Company of Pennsylvania and I. B.

K. W. 36LA116). The absence of a severance pay clause

has lead courts and arbitrators to refuse a request for sever-

ance pay. Justice Hofstadter of the New York Supreme

Court stated that the court was sympathetic to the plight of

workers who had lost their Jobs, but that the court was pow-

~ erless to act since the labor agreement was silent on sever-

ance pay (In re Lloyd, 32LA6). In the Textron Case the

labor agreement contained no severance clause. The Arbi-

trator held that he had no power to gr ant severance pay

(Textron, Ine. 12LA475 .

Tke Arbitrator in dls instant case is most sympathetic

to the Union’s request for severance pay; however, it is his

opinion that he had no power to grant the Union’s request.

If the Arbitrator were to grant the Union’s request he would

be adding to the labor agreement and therefore would be

violating Section XXII-B. Such an addition can only be

made by-negotiations between the parties.

Attention is again directed to the restraining words of

Justice Douglas in the Enterprise Wheel and Car Corpora-

tion-case: ‘‘An arbitrator is confined to interpretation and

application of the collective bargaining agreement: he does

not sit to dispense his own brand of industrial justice—his

award is legitimate only so far as it draws its essence from

the collective bargaining agreement. ”’

Appendix C - 45a

For the reasons set forth above the Union’ S request

with respect to severance pay is denied.

Although the Union’s request is not granted the Arbi-

trator strongly suggests; for humane’ reasons and in the

interest of good industrial relations}. that Company and

Union representatives sit down again and make a sincere

and intelligent effort to arrive at an agreement with respect

to severance pay for those terminated as a result of the

Danville move.

W. Roy Buckwatrer,

W. Roy Buckwalter,

Impartial Chairman.

Dated: August 17, 1962.

46a : Appendix D

APPENDIX D

Opinion of the United States District Court for the

Eastern District of Pennsylvania,

217 F. Supp. 161 (1963)

H. K. PORTER COMPANY, Inc.

v.

UNITED SAW, FILE AND STEEL PRODUCTS

| ‘WORKERS OF AMERICA, :

FEDERAL LABOR UNION.NO. 22254, AFL-CIO

» Civ. A. No. 32367.

United States District Court

E. D. Pennsylvania.

May 16, 1963.

Pepper, deuditon & Scheetz, Philadelphia, Pa., for

plaintiff.

Wilderman, Markowitz & Kirschner, vee Pa.,

for defendant.

JOHN W. LORD, Jr:, District Judge.

Arbitration of griev ances had been ordered by this

- Court as the outcome. of Civil Action No. 27077, captioned

United Saw, File and Steel Products Workers of. America,

Federal Labor Union No. 22254, AFL-CIO by Joseph Adair,

President and Trustee ad litem v. H. K. Porter Company,

Disston Division, 190 F.Supp. 407 (E.D.Pa. 1960). Since

there will be repeated references to the opinion in — case,

~ Appendix D - Ala

the following stienetatnd caption will -be used United Saw

Workers v. H. K. Porter. :

Following the arbitration thus ordered, plaintiff

brought the present action seeking to have vacated and de-

clared void a part of the arbitrator’s award. Defendant

filed an answer and counterclaim asking enforcement of the

_arbitrator’s award. Conceding that no questions of fact are

involved, both parties have moved for summary judgment.

Judicial notice is taken of the files and prior proceedings

of this Court in this matter. Further in the interest of brev-

ity, the heretofore cited opinion of this Court in pertinent:

_ part is herein incorporated by reference: United Saw Work-

ers v. H. K. Porter, 190 F.Supp. 407 (E.D.Pa. 1960). Al-

though the parties were reversed in the prior proceedings,

in that the former defendant is the present plaintiff; the en-

_ tities before the Court are the same. For convenience they

will hereafter be called Porter and Union respectively.

These controversies are connected with a certain manu-

facturing plant, in the Tacony section of Philadelphia, which

was for many years operated by Henry Disstori & Sons, Inc.,

a Pennsylvania corporation. That corporation, whose as- |

sets are now the property of Porter, will hereafter be called

Disston. The factory in question will be spoken of as the

Tacony plant.

In November, 1955, in exchange for Porter stock, Porter :

acquired substantially all Disston assets, subject to liabili-

ties. Porter stresses. in argument the fact that it did not

acquire the stock or corporate entity of Disston. Thus, it

says, there is no legal connection between Disston and

Porter. As will be seen, however, that circumstance does

not affect the ruling of this Court. . It is well to note, how-

ever, that the bare statement ‘‘no legal connection’’ does not

tell the whole story. At pages 11 and 12 of his opinion the

arbitrator found in substance that Porter did agree to abide |

ir 3

Pe ee ee ee

48a Appendix D

by the pension ‘‘plan”’ in the Disston agreement: with the

Union and to continue to pay all —— theretofore

paid by Disston.

Since November, 1955, Porter’s “Disston Division’’ has

operated the business of manufacturing saws and hand tools,

previously carried on at the former Disston plants? including

that at Tacony.

At the time Porter acquired Disston’ s assets, there was

in effect at Disston’s Tacony plant a labor agreement be-

tween Disston and Union. Porter operated under that |

‘agreement until it expired, September 15, 1956.

Three recitals from the farmer opinion state further

background of the reference to arbitration, United Saw

Workers v. H. K. Porter, 190 ita 407, 408 re

1960) :

‘“(4) The plaintiff and defendant are parties toa -

collective bargaining Agreement dated September 6,

1957 and extended by a Supplemental Agreement dated

September 15, 1958.

‘¢(5) In February of 1959, the defendant an-

nounced that it intended to move a large part of its pro-

‘duction facilities from its Tacony plant to a plant in

Danville, Virginia.

-«¢(6) Subsequent to the Company’s announcement

of its intent to move its plant, the Union and the Com-

pany had discussions of severance pay for employees

affected and the pension rights of employees who would

be laid off as a result of the move. No agreement was

' reached on these subjects.”?

_ Inthe cited opinion, it was held that these disputes were |

arbitrable. Appeal followed as to the form of order direct-

ing arbitration and finally, by direction of the United States

Appendix D : . + 49a

~ Court of Appeals for the Third Circuit, aid following ‘order

was issued by this Court: :

‘*And now to wit, this 11th day of April, 1961, it is

hereby order ed and decreed that the plaintiff’s Motion

for Summary Judgment in the abové matter be, and the

same is hereby Granted, and that Summary Judgment

is hereby entered in favor of plaintiff, United Saw, File

and Steel Products Workers of America, Federal Labor

Union No. 22254, AFL-CIO, and that defendant is

hereby ORDERED to conform and comply with Sec-

tions IIT and IV of the Collective Bargaining Agree-

ment between itself and the*plaintiff, to select an Im-

partial Chairman and to submit to arbitration, subject

to the provisions of the Collective Bargaining Agree-

ment, the grievances with respect to pensions and sever-

ance pay insofar as such grievances arise: under the -

provisions of the Collective Bargaining Agreement and

constitute claimed violations thereof, * *:* ’’

a@° @e

In due course arbitration took place, culminating in the

Award of Arbitrator dated August 17, 1962. W.-Roy Buch- |

walter, Impartial Chairman, accompanied his award with a

; comprehensive opimon. There has been no suggestion of

any procedural infor mality in the arbitration proceedings

which led up.to the award and opinion. Plaintiff’s sole ob-

jection is that it exceeded the arbifrafor’s authority as to

the matter of pension pay.

The award, apart from formal matters, is as follows:

‘‘Pensions: The Arbitrator rules that:

‘*1, Each employee who, at the time he was terminated,

had completed twenty-five years or more of service, but

had not yet reached age sixty-five, shall be paid a roll ;

pension.

50a

Appendix D

~ The formula for payment to be worked out by H.

K. Porter Company and the Union.

‘‘Bach terminated employee shall receive a $1,000

non-contributory life insurance él as pr ovided for

in Section XIX-A. ca

‘‘2. Each employee, who at the time he was terminated

had reached age sixty-five, but had not completed

twenty-five years of service shall be paid a pro rata

pension based on an equitable formula to be worked out

by H.K. Porter Company and the Union.

a7

‘‘Kach terminated employee shall receive a $1,000

non-contr ibutory life insurance policy as s provided for

in Section XIX-A.

‘<3. The request for pensions for employees who, at

their termination, had not yet reached age sixty-five.

and who had not put in twenty-five years of service is

denied.

‘*Severance Pay:

‘‘The Union’s request for severance pay is denied. 7

It is difficult to discuss the. ‘arguments of counsel for

Porter without going into the merits of arbitration. But

how this Court could go into the merits of that award with-

out flouting the Enterprise decision, among others, is diff. .

cult to see. United Steel Workers of America v. Enterprise

Wheel and Car Corporation, 363 U.S. 593, 80 S.Ct. 1358, ‘4

L.Ed.2d 1424 (1960).

The Court of Appeals for the Third Circuit has had fre-

quent occasion to interpret the famous trilogy of decisions

handed down by thie United States Supreme Court in June

of 1960. United Steelworkers of America v. American Mfg.

Co.,;

363 U.S. 564,°80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960) ;

Appendia D | 5la

United Steelworkers of America v. Warrior & Gulf Naviga-

tion Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960) ;

United Steelworkers of America v. Enterprise Wheel & Car

- Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960)..

Judge Staley, observing that the’ink was still fresh on those

opinions, noted as early as January of 1961 that by those

authorities a court cannot pass on the merits of the matter

claimed to be arbitrable. International Tel. & Tel. Corp. v.

Local 400, ete., 286 B.2d 329 (3rd Cir. relate (cases collected _

n. 4, p. 330). ‘S

More recently, the decisions to the effect that the courts

cannot look into the merits of the arbitrator’s award have:

been multiplying in the federal courts. Textile Workers

Union of America v. Cone Mills Corp., 188 F.Supp. 728, 732,

736 (M.D.N.C.1960), aff’d 290 F.2d 921 4th Cir. 1961) ; Local

Union No. 1241 of International Brotherhood of Electrical

Workers v. Columbia Broadcasting System, Inc., 207

F.Supp. 423 (E.D.Pa. 1962); General Drivers, Warehouse-

men & Helpers, Local Union No. 89 v. Riss and Company,

Ine., 372 U.S. 517, 83 S.Ct. 789, 9 L.Ed.2d 918 (March 18,

1963).

To attempt to catalogue the spate of recent decisions

affirming the rule would unnecessarily prolong this opinion.

The only question, for that matter, is whether the pension

matter was within the scope of the reference to arbitration.

_ The plain wording of the order of reference heretofore

quoted required arbitration of

‘«* *™* the grievances with respect to pensions ‘and sev-

erance pay insofar as such grievances arise under the

provisions of the Collective Bargaining Agreement and

constitute claimed violations thereof * ** ”’

It is to be noted that neither of the motions before this

Court raise any question as to severance pay. The subject

is mentioned here for the sole purpose of its bearing on the

NL LN RO I ‘

o2a | 7 Appendix D —

main issue: the scope of the reference to arbitration. On

the severance subject the Arbitrator wrote:

‘“‘The Arbitrator in the instant case is most sympa-

thetic to the Union’s request for severance pay; how- ’

ever, it is his opinion that he has no power to grant the

Union’s request. If the Arbitrator were to grant the |

Union’s request he would be adding to the labor agree-

ment,and therefore would be violating Section XXII-B.

Such an addition éan only be made by negotiations be-

tween the parties.

‘‘Attention is again directed fo the restraining

words of Justice Douglas in the Enterprise Wheel and

Car Corporation case: ‘An arbitrator is confined to in-

terpretation and application of the collective bargain-

ing agreement; he does not sit to dispense his own

brand of industrial justice * * * his award is legitimate

only so far as it draws its essence from the collective

bargaining agreement.’

‘‘For the reasons set forth above the Union’s re-

quest with respect to severance pay is denied.

‘‘ Although the Union’s request is not granted the

Arbitrator strongly suggests, for humane reasons and

in the interest of good industrial relations, that Com-

pany and Union representatives sit down again and

make a sincere-and intelligent, effort to arrive at an

agreement with respect to severance pay for those ter-

minated as a result of the Danville move.”’

Thus the Arbitrator reluctantly denied the Union’s

claims for severance pay on the ground that he had no au-

thority to make such award unger the collective bargaining

agreement. It is therefore abundantly clear that the Arbi-

trator was indeed aware of the limitations upon his au-

thority.

Appendix D oda

As to the pension claims, he nevertheless found authori-

' gation to grant the Union demands. The Court order of

’ reference to arbitration heretofore quoted specifies that the

arbitration is to deal with grievances as to pensions insofar

as covered by the collective bargaining agreement.

The positions of the Union and Porter are set out with

care in the Arbitrator’s opinion, commencing respectively |

at pages 5 and 7; then at page 9 the positions of both are

summarized. His ruling on the pension phase: consists of

five closely written pages in his opinion commencing at page

* 11. To say the least for that discussion, it is in no possible’

‘sense vulnerable to attack on the ground. that it is capricious

or arbitrary. ; a

Controversy centered about the following :

‘Section XX, Pensions, Paragraph C, Eligibility,

September, 1957 contract, provides: ‘Basic yearly pen-

sion allowance (without Social Security) which shall be

paid a retired employee who has reached the age of

sixty-five with at least twenty-five years of continuous

service with the Company. * * *’ (J oint Exhibit #2).’’

Thereafter the Arbitrator considers other provisions in

the same and later contracts which bear upon the interpreta-

tion of that clause. He also takes into consideration the

_ practice whieh had prevailed as to interpretation of the

clause above quoted saying:

i study of the exhibits submitted at the Arbitra-

tion hearings indicates that in numerous cases over the

years, it was the practice of the Pension Board to abide

by the spirit of the eligibility clause, rather than by the

wording of the clause. If the Pension Board had ad-

hered literally to the letter of the provision it would

have turned down a number of requests for pensions.

* / * * . .

ro

d4a Appendix D

“Tn December, 1951, the Pension Board granted a

pension to Fred Zitkovitz. The Board stated: ‘Mr.

Zitkovitz has broken service and does not qualify for a

pension under the 25 years eontinuous employment pro-

vision. The Board, however, has made an exception in

_this case in view of the 37 years accumulated service

and also in view of his,age.’ (Union Exhibit 4k).”’

After reviewing about twenty cases of that nature, the

’ Arbitrator reached the conclusion that those precedents

should be followed, and wrote his award accordingly. This

he had a right to do—and in so deciding, this Court arrives

at the limit of its own authority. The matter of arbitrability ©

is not an open one, having been settled several years ago.

United Saw Workers v. H. K. Porter, 190 F.Supp. 407 (E.D.

Pa.1960) ; see order of the United States Court of Appeals

for the Third Cireuit, No. 13439, March 24, 1961 and order |

of this Court April 11, 1961. This Court finds that arbitra- *

tion under that authorization took place, and that the award

of the arbitrator was within the scope of arbitration under

the order of court heretofore cited. It is not now open to a

court to reweigh the merits of the grievance. General Driv-

ers, etc., Local Union No. 89 v. Riss and Company, 372 U.S.

517, 83 S.Ct. 789, 791, 9 L.Ed.2d 918 (March 18, 1963).

For the foregoing reasons, the Motion for Summary

| Judgment of plaintiff Porter is hereby denied, and the Mo- .

tion for Summary Judgment of defendant Union is hereby

granted, and it is so ordered.

ce

Appendix E ova

APPENDIX E

Opinion of the United States Court of Appeals

for the Third Circuit, 333 F. 2d 596 (1964)

H. K. PORTER COMPANY, INC.,

. Appellant, .

Vv.

UNITED SAW, FILE AND STEEL PRODUCTS

WORKERS OF AMERICA,

FEDERAL LABOR UNION NO. 22254, AFL-CIO.

No. 14509.

United States Court of Appeals

: ~ Third Cireuit.

Argued Jan. 21, 1964.

Decided June 19, 1964.

Proceeding involving labor arbitration award. The .-

United States District Court for the Eastern District of

Pennsylvania, John W. Lord, Jr., J., 217 F.Supp. 161, or-

dered enforcement, and employer appealed. The Court of

Appeals, Forman, Circuit Judge, held that labor arbitrator,

" in passing on dispute arising out of movement of production

facilities, could, in view of prior practice of not requiring

strict compliance with contract requirements that pensioners: .

be 65 years of age with 25 years of continuous service, award

pensions to employees with 25 years service even though

they had not reached age 65, but could not, since there was

no precedent for granting pensions to employees with less |

than required service, award pro rata pensions to employees

who had reached age of 65 without serving required time.

56a . er E

Philip H. inubinw. Philadelphia, Pa. (Edward W.

Madeira, Jr., Alfred W. Oariise, Jr, Philadelphia, Pa., on

the brief), tov appellant.

~ Louis H,. Wilderman, Philadelphia, Pa. (Richard H.

Markowitz, Wilderman, Markowitz & Kirschner, Philadel-

phia, Pa., on the brief), for appellee. ;

Before BIGGS, Chief Judge, and FORMAN and

GANRY, Circuit Judges.

FORMAN, Cir cuit J udge.

H. K.-Porter Company (hereafter the Sows ac-

quired in November of 1955 substantially all the assets of

Henry Disston & Sons, Inc.: (hereafter Disston), who. for .

many years maintained a steel production plant in the

Tacony section of Philadelphia. The Company continued to

operate this plant there until February of 1959 ealling it the

Henry Disston Division of the H. K. Porter Company. It

then announced that it intended to move a large part of its

production facilities from. Philadelphia to Danville, Vir-

" ginia. |

Thereafter, United Saw, File an@ Steel Products Work-

ers of America, Federal Labor Union No, 22254, AF'L- CIO

(hereafter the Union) ‘and th: Company, discussed, among

other things, severance pay and pension rights of the em-

ployees. ‘They, however; failed to agree thereon.

The Union brought an action in the United States Dis- -

trict Court for the Eastern District of Pennsylvania’ to com-

~ pel the Company to proceed to arbitration under its collec-

tive bargaining agreement of September 15, 1957 as

extended on September 15, 1958. The District Court held

1. Under § 301, Labor Management Relations Act of 1947, 29

U.S.C. § 185 (1958).

Appendix E d7a

*

that the disputes ‘concerning sever ance pay and pension

rights of the employees were arbitrable.

After hearing the dispute, the Arbitrator, 7 on August

17, 1962, among ofiee things, ruled:

‘1. Hach employee who, at the time i was termi-

nated, had completed twenty-five years of service or

more, but had not reached age = shall be paid

full pension.

“The formula for payment to be worked out by H.

K. Porter Company and the Union.

‘‘Hach terminated employee shall receive a $1,000

non-contributory life i insurance policy, as provided for

in Section XIX-A.

‘2. Each employee who, at the time he was termi-

nated had reached age sixty-five, but had not completed

twenty-five years of service shall be paid a pro rata

2. United Saw, File & Steel Prod. Wkrs. v. H. K. Porter € Co.; 190

F.Supp. 407 (E.D.Pa.1960) ; appeal followed as to the form of onder

and the U. S. Court of Appeals for the Third Circuit on March 24,

_ 1961, issued its Order No. 13439, settling the terms, pursuant to which

- the District Court entered the following order :

“And now to wit, this 11th day of April, 1961, it is hereby ordered

and decreed that the plaintiff's Motion for Summary Judgment in the

above matter be, and the same is hereby Granted, and that Summary

_Judgment is hereby entered in favor of plaintiff, United Saw, File and

‘Steel Products Workers of America, Federal Labor Union No. 22254,

AFL-CIO, and that defendant is hereby ORDERED to conform and

comply.with Sections III and FV of the Collective Bargaining Agree-

ment between itself and the plaintiff, to select an Impartial Chairman

and to submit to arbitration, subject to the provisions of the Collective

Bargaining Agreement, the grievances with respect to pensions and

severance pay insofar as such grievances arise under the provisions of

the Collective Bargaining Agreement and constitute claimed violations

thereor,. ***"” =

3. W. “Roy Buckwalter, Professor of Finance and Management,

Temple University.

POR RES ATES REAR I

58a | Appendix E

pension based on an equitable formula to be worked out

by H. K. Porter Company and the Union.

‘¢Hach terminated employee shall receive a $1,000

non-contributory life insurance policy as provided for

_ in Section XIX-A.

‘<3. The request for pensions for employees who,

at their termination, had not reached age sixty-five and

who had not put in twenty-five years of service is

denied.”’

The Company filed an action in the District Court at-

tacking the award. The litigation was brought to a head by

motions for: summary judgment filed by both the Company

and the Union. For its part the Company sought to have

_ the award vacated on the grounds that the Arbitrator had

‘exceeded his authority and the scope of the submission’”’

and that he had ‘‘added to, amended and completely disre-

garded the explicit and unambiguous provisions of the

Agreement.’’. The Union, on the other hand, sought, among

other things, an order that the Company perform the obli-

gations set forth in the award of the Arbitrator. |

The District Court denied the motion of the Company

and granted the motion of the Union, ordering enforcement

of the arbitration award, from which the Company has ap-

pealed on the same grounds it asserted in attacking the

award.°

In their collective bargaining agreements of September

1, 1950, February 4, 1952 and July 15, 1953, Disston and the

Union treated the subject of pensions in part as follows:

‘‘C, Exicrimiry. Basi¢ yearly pension allowance (with-

out Social Security) which shall be paid a retired em-

4. H. K. Porter Co. v. United Saw, File and Steel Prod. Wkrs.,

217 F.Supp. 161 (E.D.Pa.1963).

_ 5. The demand of the Union for severance pay was rejected by

the Arbitrator and that claim is not included in this appeal.

Appendix E o9a

ploye (sic) who has reached the age of sixty- five with ©

at least twenty-five years of continuous service with the -

Company, * * * 99

Provision was also made for retirement at age sixty with at -

least thirty years of continuous service. .

After the acquisition of the Disston plant by the Com-

pany, it entered into a Memorandum of Agreement with the

Union, dated September 19, 1956; as of September ‘ 1956,

containing, among other things, the following provisions:

‘“T A joint Union-Management Committee will be

established to write a finalized Agreement to be entered

into between the Union and the Henry Disston Division

of H. K. Porter Company, Inc. of Pittsburgh, and shall

use for such purpose the Agreement between the Union

and Henry Disston & Sons, Ine. Included ‘in the rewrite

shall be the following :”?

* * * = *

*““G) Pensions:

‘‘The Company will continue the pension plan negoti-

ated between the Union and Henry Disston and Sons,

Inc., except for the following changes:

‘*1) Elimination of the provision of eligibility

for pension at age 60 with 30 or more years of con-

tinuous service.’’

Approximately a year later, on September 16, 1957, the

Company entered into a collective bargaining agreement

with the Union containing the following provisions:

‘¢ Section XX—PENSIONS.

‘‘The Company agrees to continue pensions payments

as negotiated September 1, 1950, February 4, 1952 and

July 15, 1953 with its “predecessor Henry Dincton &

“yar ae

60a

Appendix E

Sons, Ine. The Company will also provide for all em-

ployes (sic) covered by this Agreement the following

Pension Plan: ~

‘CA. The administration of this Pension Plan shall be

in the charge of the Management General Pension

Board, Henry Disston Division, H. K. Porter Company

(Delaware) Hourly Employes (sic) Pension Plan.

‘¢B, Unton ManaGeMent Pension Committers. A pen-

sion committee consisting of three members from Man-

agement and three members from active Union member-

ship shall review eligibility problems * * * Problems

of eligibility within the terms of this pension plan that

cannot be solved by this Pension Committee shall be the

only pension problems subject to arbitration, * * *

‘‘O, Exiersmiry. Basic yearly pension allowance (with-

out Social Security) which shall be. paid a retired em-

ploye (sic) who has reached the age of sixty-five with at

least twenty-five years of continuous service with the

Company, shall depend upon two conditions:

‘‘1, The number of years of continuous service the

employe (sic) has with the Company. The length of °

continuous service of an employe (sic) shall be com-

puted from the date on which he or she first began work.

* * # 9)

* 7 ¥ ¥* *

‘2. The amount of the employe’s (sic) average:

regular yearly earnings, * * * ”’

Pensioned employees were also entitled to life insur-

ance policies under the Agreement on the following basis:

“¢ Section XI_X—Lire INSURANCE.

‘A. The Company will provide to all employees cov-

ered by this Agreement, including the Union President

Appendix E 6la

and Union Secretary, effective on the day after complet-

ing one month of continuous service with the Company,

a $2500. non- -contributory Life Insurance policy until

retirement date; and on the First of the month follow-

ing the employe’s (sfc) pensioned retirement, a $1000,

non-contributory Life Insurance Policy while on pen-

‘sioned retirement. * * * =

Other provisions of the Agreement related to arbitra-

_ tion in part as follows:

‘* Section III—ApsustMENT OF GRIEVANCES

‘‘A. Should differences arise between the Company and

the Union or any of its membérs as to the meaning and

application of the provisions of this Agreement or

‘ should any grievance arise between the parties hereto,

there shall be no stoppage of work, strike or lockout on

account of such differences, but an earnest and sincere

effort shall be made by the parties hereto to settle such

differences in the following manner :’? ©

* * * * *

_ **Section IV—ImpartiaL CHAIRMAN

‘*A, The Impartial Chairman shall be chosen by mutual

agreement between the Union and the Company. * * *

‘*B. The use of arbitration is confined to grievances of

individuals or groups and neither the Company nor the

Union agree to submit to arbitration either broad labor

policies or plant-wide wage adjustments.

‘*C. The Impartial Chairman shall have the authority |

_ to make final decision in such cases where the Union and

the Company cannot agree.’’

The Arbitrator ruled that he was without power to

grant allowance of severance pay, absent any authority

thereon in the collective bargaining agreement. To do so,

7, OS Gen pry gine tee x ®

f “aH aad _—

62a 3 A _— ix E

he reasoned, would be to make an unauthorized addition to

the agreement i in violation of Section XX-B. He ther efore

rejected the Union’s request for severance pay.

The Arbitrator, however, differentiated his interpreta-

tion of the pension clause of the agreement from severance

pay on the ground that there were patterns of past pr actice

with regard to pensions, not present in the instance of sever-

ance pay. He believed that these practices, although car-

ried out not by the Company but by Disston, demonstrated

that the Pension Board had abided by the spirit of Section

XX rather than by its exact wording. Consequently, the

. Arbitrator held that this‘fustified a broader interpretation

than a mere literal reading of the eligibility clause which

called for sixty-five years of age and twenty-five years of

- continuous service before the granting of a pension.

After analyzing the evidence submitted to him, the Ar-

bitrator in fact found twenty cases between 1950 and 1955,

wherein there was deviation from a strict interpretation of

. the re requirement. In his —e he stated:

‘so * * * Tn numerous instances where an employee

had less than 25 years of continuous service a pension

was granted because ‘special consideration was given

because of the long period of ‘total employment.’ In-

stances were cited of pensions being granted where the

workers (Snyder and Bamford) had not met.the age te-

quirement but had long total service (44 years and 41

years). The Personnel Director, Mr,-Norton testified

that breaks in service caused by the 1930 depression

were generally not construed as breaks. In several in-

stances the closing of a shop or the curtailment of the

operation of a shop was a factor in influencing the deci-

sion of the Pension Board. In one instance a pension

was given because of physical disability, to an employee

who was only 46 years of age. This was done in spite

‘Appendix E -: -. 63a

of the fact that the labor agreement made no provision

for a pension because of physical disability.”’

The Memorandum of Agreement of September 1, 1956

between the Conipany, and Disston provided that the former

would continue the pension plan negotiated between the

Union and Disston. For this reason, the Arbitrator con-

cluded that he should consider the pension practices of the

former employer Disston.

The Company argued that it was in no wise bound ‘by

the practices prevailing under the Disston agreement. It

asserted that while a plan for pensions was perpetuated by

the agreement between the Company and the Union which

aa /prevailed in 1959 generally similar to the scheme followed

under the Disston agreement, there was a difference i in some’

terms and new policies were contemplated to ‘be carried out

by new personnel. The Company further submitted that the

Arbitrator eonstrued not the contract with the Company but

the one with Disston. It contended also that the second part

of the award of the Arbitrator which granted pensions to

employees with less than twenty-five years-of service is

completely unsupported even by any of Disston’ S. prior

practices and must be vacated.

I

The parties coneeded that the District Court properly

refused to review the merits of the arbitration award.® To

be valid, however, an arbitrator must draw the essence of

the award from the collective bargaining agreement.? An

arbitrator should not dispense his own brand of industrial

justice, but must confine himself to the interpretation and

- application of the collective bargaining agreement.& He

6. United Steelworkers, etc. v. Enterprise Wheel & Car Corp.,

363 U.S. 593, 596, 80 S.Ct. 1358, 1360, 4 L.Ed.2d 1424, 1427 (1960).

7. Id. At 597, 80 S.Ct. at 1361, 4 L.Ed. 2d at 1428.

8. Ibid.

64a : Appendia FE

» may, nevertheless, ‘‘look for guidance from many sources.’”

The Supreme Court has said:

‘‘The labor arbitrator’s source of law is not con- ©

fined to the express provisions of the contract, as the in-

dustrial common law—the practice of the industry and

the shop—is equally a part of the collective bar gaining

agr eement although not expressed in it. * * * 7°

We disagree with the contentions of the Company that

the Arbitrator in this case was precluded from considering

the pension practices under fhe Disston agreement, for a

provision of the Memorandum of Agreement of September —

19, 1956 committed it to ‘‘continue the pension plan negoti-

- ated between the Union and Henry Disston and Sons, Ine.

** # 99 as

- It should be remembered that the arbitration proceed- .

ings in this case arose out of the gr ievances of employees

whosé services with the Company were terminated in 1959 .

~ when the Company removed a large part:of its Disston fa-

cilities from Philadelphia to Danville, Virginia. The first

part of the Arbitrator’s ruling went no further in prospec-

tive effect than to rule that those employees who had ren-

dered the Company and its predecessor twenty-five years or

@ore of service and whose jobs were terminated by reason

of the removal of the plant should not suffer the loss of pen-

sions even though such employees had not attained sixty-five

years of age.

In the margin is a list of the inatances examined by the

‘Arbitrator where the length of service had influenced the

Pension Board of Disston to grant pensions to employees

9. Ibid.

10. United Steelworkers, etc. v. Warrior & Gulf aviaidiie Co.,

363 U.S. 574, 581-582, 80 S.Ct. 1347, 1352-1353, 4 L.Ed.2d 1409, .

1416-1417 (1960).

Appendix E

65a

notwithstanding the failure of strict compliance with the

eligibility clause of sixty-five years of age and twenty-five

_ years of continuous service.!! Under the circumstances of

SO RPNAMNAR WN =

11. Abstract of Arbitrator’s A nalysis of Previous Practices

Name of

“Employee

James Rose*

Frank McKinney*

Edward Riley**

Peter McKinney**

George Jackson**

William Robinson**

Fred Zetkovitz***

Richard Gundelswiler**

Frank Snyder***

Thomas Bamford***

. Irving Errickson***

. George Southwell****

. Harrd J. Mason#

. William Pritchard#

‘ Harry Higham*** .

. Henry Schneider***

. George Hermanowicz# + 64

. Leonard Hutchinson## 64

. Elmer Dutcher# +

- Robert Kesslerr###

* Declared ineligible for pension b

Pension Board.

Ageat Previous Continuous Years of

“Termi- Yearsof Yearsat Total

nation . Service Termination Service

68 34 12 46

73 28 | 20% 48%

78 29 . 27Y% 56%

71 26 28% 54%

65 19 32 51

70 36 20% 56%

70 16 31- 37

77 11 48 59

62 24 20 44

58 ey 41 41

67 20 2134 4134

68 46

74 271% 23% -*51

73 . : 53%"

a 9 37

68 21% 21% 43

7 35% 42yY,

50 50

61 47¥ 47Y,

46 30 30

y arbitration but granted by

** Granted small increase in pension on account of exceptionally

long total service.

*** Awarded pension notwithstanding broken service.

. sidered a break in continuous service.

# Record shows special grant.

+ # Terminated with closing of File Division in 1954. Ineligible

- for Social Security until age sixty-five,

‘sion until qualified for Social Security.

# # # Given a grant or pension on’ account of physical disability.

**** Three and a half years of work lost during depression not con-

granted increased pen-

66a — Appendia E

this case these practices formed a souree of guidance to

which the Arbitrator was authorized to look, in interpreting

the eligibility clause of the agreement.” The Arbitrator

acted entirely within his competence in granting the pen-

sions based on duration of service. The District Court prop-

erly approved these findings and conclusions. Hence the

Judgment of the District Court with regard to the Part I

ruling ofthe Arbitrator will be affirmed.

II

Examination of the record, however, has failed to re-

veal any support for the second part of the Arbitrator’s

award. There he ruled: |

‘62. Bach employee who, at the time he was termi-

nated had reached age sixty-five, but had not completed

twenty-five years of service shall be paid a pro rata pen-

sion based on an equitable formula to be worked out by

H. K: Porter Company and the Union.

‘*Hach terminated employee shall receive a $1,000;

non-contributory life insurance policy as provided for

in Section XLX-A.”’ Pee

e eal

The Arbitrator said in his opinion:

“Tt is well accepted that a pension is paid pri-

marily because of years of service and not because an

employee has attained a certain age.”’

» Assuming the accuracy of this statement, it gives. support

to the allowance of pensions to employees for long service

(over twenty-five years continuous or total), but it defeats

the conclusion that the employee should be granted a pen-

sion when he has reached the age of sixty-five regardless of

his years of service. |

e

Appendix EB 67a

A reference to the cases examined by the Arbitrator

upon which he bases his authority to deviate from the clear

and unambiguous words of the eligibility clause discloses in

all twenty cases each employee rendered not. less than

twenty-five years of total service.” Indeed, the minimum

was thirty years and the maximum fifty-nine years. In all

instances except two where the employees were under sixty-

five years, they qualified for-pensions, being over sixty and

having thirty years of service. Ihe two under sixty, one

was forty-six years of age with thirty years of service, but

was given either a grant or a pension on account of physical

disability. The other was fifty-eight but had forty-one years

of service and no reason appears for the grant to him.

That the Company was moving its plant fo a new loca-,

tion may have invoked hardship on older employees. Yet,

absent any provision either explicitly or implicitly authoriz-

ing the Arbitrator’s ruling in Part 2 of his award, or any

prior practice which reasonably. could so interpret it, he

lacked.a basis for his conclusion. As already stated, the

Arbitrator may not administer his own brand of industrial

justice. ; |

We find that in Part 2 of the award the Arbitrator had |

no ground upon which to base his interpretation of the clear

and unambiguous words of the eligibility clause. Standing

by itself, it gave him no room to construe it in any manner

than according to its plain meaning. Bereft of any practice

evidencing a relaxation of the requirement of years of total

service and relying only upon age, the Arbitrator was un-

justified in deviating from the plain mandate of the eligi- -

bility clause, as it concerned those who fulfilled only the por-

tion making the age of sixty-five a requirement. Indeed,

such an interpretation neither goes to the essence nor to the

application of the collective bargaining agreement. The

12. Ibid.

68a 4 Appendix E

District Court erred in holding that the Arbitrator did not

exceed his authority when he ruled that:

‘‘2. Bach employee who, at the time he was termi-

nated had reached age sixty-five, but had not completed

twenty-five years of service shall be paid a pfo rata pen-

sion based on an equitable formula to be worked out by

H. K. Porter Company and the Union.

‘‘Hach terminated employee shall receive a $1,000

non-contributory life insurance policy as provided for

in Section XIX-A.’’

‘Accordingly, the judgment of the District Court to that ex-

tent will be reversed. The case will be remayded with in-

structions to enter judgment in favor of the Company

insofar as Part 2 of the Arbitrator’s award is concerned,

pursuant to the views expressed herein.

~ Appendix I 69a

APPENDIX F

_

Order and Judgment of United States District Court

for the Eastern District of Pennsylvania

ORDER AND JUDGMENT

_ December 7, 1964

AND NOW, this 7th day of December, 1964, pursuant to

the Judgment of the United States Court of Appeals for the —

Third Circuit remanding the case to this Court, it is

ORDERED:

1. The motions for summary judgment of plaintiff and

defendant are granted in part and denied in part.

2. The arbitration award of Professor W. R. Buck-

' walter is hereby enforced as to paragraph 1 thereof as

follows:

‘‘Hach employee who, at the time he was termi-

nated, had.completed twenty-five years or more of serv-

ice, but had not yet reached age ee five shall be paid

a full pension.

‘‘The formula for obpiuent to be worked out by H.

K. Porter Company and the Union.

‘“‘Kach terminated employee shall receive a $1,000

non-contributory life i insurance policy as provided for

in Section XTX-A.

3. Paragraph 2 of the arbitration award of Professor

W. R. Buckwalter is vacated and declared void and unen-

forceable. Said paragraph reads as follows:

70a

Appendia F

“Bach employe who, at the time*he was termi-

nated had reached Lge sixty-five but had not completed

twenty-five years pf service shall be paid a pro-rata

pension based on an equitable formula to be worked out

by H. K. Porter er ‘Company and the Union.

‘Hach terminated employee shall receive a $1, 000

- non-contributory life insurance policy as provided for

in Section XIX-A.

4, This Court shall retain jurisdiction of the parties to

and subject matter of this action under Section 301 of the

Labor Management Relations Act of 1947. In the event dif-

ferences or disputes arise between the parties as to the in-

terpretation and application and/or the method of enforce-

ment, including the formula for payment, or the terms of

paragraph 1 of the arbitration-award as quoted above, then

either party shall apply to this Court under the above -

tion for such action as it deems appropriate.

5. Each onity shall bear its own costs.

6. The Clerk shall enter findipmont in accordance

herewith.

BY THE COURT

JOHN W. LORD, JR., J.

wl ppendix G 7la

APPENDIX G

_—_—_—

Opinion and Award of Arbitrator Donald A. Crawford

ARBITRATOR’S OPIN ION & AWARD

IN THE MATTER OF ARBITRATION BETWEEN

UNITED SAW, FILE-AND STEEL PRODUCTS

WORKERS OF AMERICA, Federal Labor

Union No. 22254, AFL-CIO:

and

H. K. PORTER COMPANY, INC.

APPEARANCES: =

FOR THE COMPANY—Pepper, Hamilton & Scheetz by.

Edward W. Madeira, Jr. and Alfred W. Cortese,

Counsel; Paul R. Obert, Secretary and General

Counsel, H. K. Porter Company; Walter E. Norton,

Industrial Relations Manager, Philadelphia

Works; Robert T. Rainey, Supervisor, Pensions

and Trusts.

FOR THE UNION—Wilderman, Markowitz & Kirschner .

. by Louis W. Wilderman, Counsel; Anthony

Wahner, President; William Sauers, Secretary-

Treasurer ; Donald A. Grubbs, Actuary.

BACKGROUND

This matter goes back to August, 1959 when the Union

grieved requesting severance pay and pensions after: the

Company had announced its intention to move a large por-

tion of the operations of its Philadelphia plant to Danville,

ZL

i200 Appendix G

Virginia. The Company contested arbitrability. On April

11, 1961 Judge John W. Lord of the United States District

Court directed the Company to:

‘*.. conform and comply with Sections III and IV of

the Collective Bargaining Agreement between itself and

~ the Plaintiff, to select an Impartial Chairman and to

submit to arbitration, subject to the provisions of the

Collective Bargaining Agreement, the grievances with .

respect to pensions and severance pay insofar as such

(2) =.

grievances arise under the provisions of the Collective

Bargaining Agreement, and constitute claimed viola-

- tions thereof...’ j

_ Thereafter, W. Roy Buckwalter arbitrated the dispute.

The grievances jbefore him are set forth in the opinion ac-

‘ companying his award, dated August 17, 1962, as follows:

_**The issues to be arbitrated relate to pensions and

severance pay, as required by the Order of the United

States District Court for the Eastern District of Penn-

sylvania...- ee

‘*The Union grieves that the Company has misinter-

preted and misapplied Article XX of the Agreement

insofar as the eligibility for pensions of employees af-

fected by the Company’s movement of its plant to Dan-

ville, Virginia, is. concerned. In addition, the Union

grieves that the Company’s proposal entitled ‘‘EKm-

ployee Assistance Plan for Employees affected by the

Danville Move’ is unacceptable and ‘the Company has

refused to discuss counter-proposals submitted by the

Union, or to take any action thereon in the making of

adequate provision for employees affected by the Com-

* pany’s move to Danville, Virginia.’ |

Appendix G } 73a

The Award states: /

‘*Pensions: The Arbitrator rules that:

**1. Each employee who, at the time he was

terminated, had completed twenty-five years or

more of service, but had not yet reached age sixty-:

five, shall be paid a full pension.

“The formula for payment to ‘be worked out

by H. K. Porter Company and the Union.

‘‘Kach terminated employee shall receive. a

$1,000 non- -contributory life insurance eae d as

= ovided for in Section XIX- A..

‘*2. Each employee, who at the time he was iy.

2 minated had reached age sixty-five, but had not

completed twenty-five years of service shall be paid

a pro-rata pension based on an equitable formula

to be worked

(3)

out by H. K. Porter Company and the Union.

«3. The request for pensions for employees

who, at their termination, had not yet reached age

sixty-five and who had not put in twenty-five years

of service is denied.

i"

“Severance Pay:

‘“The Union’s request for severance pay is

denied.”? -

The Company sought to have this Award vacated. On

May 10, 1963 the District Court? granted enforcement of the

- 1. H.K. Porter, Inc. a. United Saw, File & Steel Products Work-

ers, 217 F. Supp. 161 (E.D, Pa. 1963).

co

va

74a : Appendix G

Award., On June 19, 1964 the Court of Appeals for the

Third Circuit reversed the judgment of the Distget Court

to the extent that such judgment enforced Paragraph 2 of

the Award.?, On December 7, 1964 J udge Lord.entered a fur-

ther order and Judgment which, reads in Paragraphs 2 and

4 as follows: ie

‘9 The arbitration award of Professor W. R.

Buckwalter is hereby enforced as to per agraph 1 thereof

as follows:

' *Kach employee who, at the time he was termi-

nated, had completed twenty-five years or more of

service, but had not yet reached age enya shall

be paid.a full pension.

‘The formula for payment to be worked out by

H. K. Porter Company and the Union.

‘Each ‘terminated employee shall receive a

$1,000 non-contributory life insurance policy as

provided for in Section XIX-A.’ ”’

“64. This Court shall retain jurisdiction of the par-

_ties to and subject matter of this action under Section

301 of the Labor Management Relation Act of 1947.. In

the event differences of disputes arise between the par-

ties as to the interpretation and application and/or the

method of enforcement, including the formula: for

(4) . | | a

payment, of the terms of paragraph 1 of the arbitration

award as quoted above, then either party shall apply to

this Court under the above caption | for such action as it

deems appropriate.”

=

y ae K . Porter, Inc. v. United Saw, File & Steel Products Work-

ers, 333 F. 2d 596 (3rd Cir. 1964). ,

. Appendia G ~ Tda

The parties could not agree. The Union has insisted

that full‘pensions be paid as of the time of termination irre-

spective of age; the Company, at age 65. The Union has

_ claimed that men with 24 years of service at time of termina-

tion are entitled. The Company has said not, and also that

men who died before reaching age 65 are not entitled. The

Union has asked funding, joint administration, and interest.

‘The Company has contested arbitrability. The claims of

four individuals have been in dispute.

The parties did not follow the predictable course and

apply to the District Court for decision as permitted in the

December 7, 1964 Order or ask Ar bitratot Buckwalter what

he intended by his Award. Instead they chose a second arbi-

trator, who must rely on the award, opinion, contract and

proceedings to determine what Buckwalter intended by his

Award...

Hearings were held on July 22 and 23, 1965. Briefs

‘were submitted on November 5, 1965. Oral argument oc-

curred on December 16, 1965. On January 21, 1966, the arbi-

trator wrote the parties as follows:

‘*Gentlemen:

‘¢ After considerable study of the record I do not

interpret the award to require that-a 25 year-service

employee reach age 65 before he is paid a pension. I

consider this issue to-be a matter of interpretation

within my jurisdiction.’ ‘I will submit a formal opinion

and award ¢ on this issue subsequently.

(5)

“This question of course is the threshold issue, and

its determination may make it. possible for the remain-

ing issues to be resolved. To facilitate a faster resolu- -

tion of the ease and to avoid the possibility of further

76a e Appendix G

_ litigation, I am referring back all- of the alter issues

raised at the hearing and in the briefs. These are X1)

actudrial reduction of the pension amounts, (2) the 24-

year-service group, (3) the rights of certain specified

individuals, (4) interest, (5) calculation of social se-

‘eurity, (6) funding, (7) joint administration, (8) life

insurance, etc. |

‘‘T am retaining jurisdiction in the event you do

not want to negotiate or cannot settle the remaining is-

sues. Should the remaining issues be referred,back for

an award, proposals made in the course of negotiations

will of course be unknown to me and therefore cannot

vrejudice either party.”’

Negotiations pursuant to this letter continued into May,

but finally proved unsuccessful. On June 3, 1966 the arbi- ~

trator met with the parties to better understand some of the

cost estimates. He also requested the transcript and ex-.

hibits in the Buckwaltér case, and the briefs submitted by

the parties to the courts. He received the transcript and

~ some, but not all, of the evidence. The Award is the conelu-

sion as to what was intended by Buckwalter based on all of

this material.

_ The cost of the Union’s demands run far in excess of a

million dotlars. The Company considers its obligation under

Paragraph 1 of the Buckwalter Award to sides in the neigh-

borhood of a quarter million dollar S.

?

(6)

| THE PARTIES’ ARGUMENTS

The key questions raised by the parties’ respective in-

terpretations of Paragraph 1 of the Buckwalter Award are ~

arbitrability, to which the Company devotes a substantial

+ A

Appendix G - Ta

part of its brief, and whether or not grievants with 25 years

or more of continuous service are entitled to payment of full

pensions as of time of termination regardless of. age.

- Throughout the court and arbitration proceedings the Com-

pany has relied on the express provisions of the contract ;

has contested arbitrability on the basis of the general and

* special limitations on arbitration ‘in the contract ; and argues

‘that pension payments for employees under age 65 is not an

arbitrable issue. The Company also maintains that no

_ practice exists for pension payments to underage employees.

The Union has argued throughout‘all the proceedings that

_ the Arbitrator has authority to award the Union’s demands,

and has relied on the-practices of the Pension Board and

the concept of unjust enrichment.

More specifically, the Company objects to the arbitra-

tion of the grievances insofar as they go beyond question of

eligibility. ‘‘There is no waiver on the part of the Company

of any right to have such question of arbitrability resolved

by the court.’’

The Company quotes Section IV of the entecbor 16,

1957 Agreement, which excludes ‘‘broad labor policies’’

and ‘‘plant-wide wage adjustments’’ from arbitration, and

Section XX-B which expressly limits the authority of an

arbitrator in matters involving pensions to problems

(7) |

of eligibility : |

—Pyoblems of cligibility within the terms of

this pension plan that cannot be solved by this Pen-

sion Committee shall be the only pension problems

subject to arbitration. ...”’

The Company says that Arbitrator Buckwalter recog-

nized this limitation upon his authority for his Award goes

+ ARE Behe Ppa GRE

78a | . Appendia G

no further than to decide the general category of employees

eligible for pensions. Indeed, he refers to a ‘‘formula’ for

payment to be worked out’’ by the Company and the Union? |

Accordingly, the only issues are whether employees under -

age 65 with 24 years of continuous service at time of termi- |

nation and certain specified grievants are eligible for pen-,

sions under Paragraph 1 of the Buckwalter Award.

What is not arbitrable, the Company continues, aie the

ingredients of the formula for payment as requested by the

Union: : eas .

1. Funding of the pension plan by the Company.

2. Joint administration of the pension plan.

3. Payment of pension should commence as of the date

of termination of employment rather than at age 65

as specified in the contract.

4. The Company should pay interest on the fund from

the date of termination of employment of the em-

ployees concerned until the present.

The Company cites Atkinson v. Sinclair Refining Com-

pany, 379 U.S. 238 (1962), United Steelworkers of America

v. Warrior and Gulf Navigation Co., 363 U.S. 074, 582 (1960)

and Boeing Co. v.

(8)

International U., United A., A € A. 1. Workers, 234 F. Supp.

404 (E:D. Pa. 1964) to the effect that arbitrability is for the

courts; that the contract can specifically exclude certain is-

sues from arbitration; that arbitration cannot be ordered

where the parties have specifically excluded it.

1. This issue raises questions of actuarial reduction, applicability

- of the minimum guaranteed pension and deaths before age 65. .

Appendix G | 79a

The Company contends that the exclusion language of

. Section XX-B is clear and that there is no controversy here

over the meaning of ‘‘eligibility.’’ Accordingly, this case is

unlike Desert Coca Cola Bottling Co. v. General Sales

Drivers'—‘‘Wages’’—-and_ Silvercups Bakers, Inc. v.

Strauss’°—‘‘delivery ,methods’’—where the exclusion

clausés have failed because of ambiguity and vagueness. ©

Rather, this case is like Communication Workers of Amer-

wca v. New York Telephone Co2—‘‘Section 9.08’’—and

Boeing Co. supra—‘‘listed management prerogatives ’’—

where the exclusion clause has -been held sufficiently clear

to bar arbitration. Therefore, the only question for arbitra-

tion is which employees are eligible for pensions.

Concerning the Union’s request for payment of pen-

sions upon termination of employment, the Company argues .

that the Union’s counter-proposa! to the Company’s sever-

ance pay proposal indicates that the Union recognizes that

payment siarts at age 65; that the parties’ bargain, as

spelled out in Section XX-C, is the payment of a pension to

a ‘‘retired employee who has reached the age of sixty-

five... ’’; that Buckwalter’s Award did not change this

term; that the Union now asks the Arbitrator to impose

upon the Company a tremendous liability °

(9) ,

entirely different from that set forth in the contract. by

granting employees pensions upon termination of employ-

ment even though one was only 42 years old at such time.

The Company points out that the Court held that Buck-

walter could alter the Eligibility clause on the basis of

practice, but that the practice must be well documented to

1. 335 F. 2d 198 (9th Cir. 1964).

2. 60 LRRM 2103 (E.D. N.Y. 1965).

3. 327 F.2d 94 (2nd Cir. 1964).

.

80a Appendix G

permit deviation froin the contr: act. Referring to the Opin-

ion of the Circuit Court of Appeals, the Company notes that

the Court said that in all cases of past practice except two

the employees qualified for pensions, being over sixty and

having 30 years of service. Relying on Webster’s defini-

tions, the Cofmpany contends that two matenies do not make ~

a well documented practice.

The Company argues further that these two instances,

and one more in evidence, are physical disability cases; that

this is why pensions were paid at an early age; that more-

over, these cases occurred prior to 1957, since when the

contract has been amended to provide for physical disability

case; that accordingly, there is no practice to support pay-

ment of pensions before age 65 and therefore the Eligibility

clause must control.

Concerning arbitrability,.the Union ern that this

question has been decided long ago, ana iinally by the

courts, as has been the issue of enforceability. It asks that

the Company take |

(10)

notice of the decisions—especially paragraph 4 of Judge

Lord’s December 7, 1964 Order. Under this Paragraph, the

Union argues, Ar bitrator Crawford’s jurisdiction includes

the issues spelled out in that Paragraph.

As to its request for payment of pensions at time of

termination, the Union argues that an unprecedented situ-

ation ‘s presented here in the Company’s closing of 80

percent of its plant; that this action made it impossible for

1. Section XX-J of the September 16, 1957 contract, which reads :

“In cases of physical disability and hardship, a special consideration

will be recommended to the Management General Pension Board for

‘employees who are at least sixty but less than sixty-five years of age

and who have thirty or more years of continuous’ Plant Service.”

Appendix G . Sla

the grievants to perform their side of the pension bargain

—to supply 25 years of continuous service and attain age

65; that their non-performance did not harm the Company

but rather resulted from a company action taken for its

own benefit; that therefore the Company may not refuse

its side of the bargain—to pay pensions.

The import of the Union argument is that pensions are

deferred wages, accruing in this ease at the rate of % per-

cent of payroll per year since 1950; that in addition, the

Company was. obliged under the pension plan to provide for

years of service of its employees prior to 1950; that the

employees gave up a share of immediate wage increases to

secure deferred wages in the form of pension benefits ; that

to the extent that the Company takes the money represented

_ by this accrued liability, it is being unjustly enriched; that

of the original 350 grievants—all of whom have an equitable

claim on this ground —280 come away from this arbitration

empty-handed; that further, when Porter bought Disston

in 1956, it undoubtedly

(12)

considered the accrued and accruing liability for pensions

and the sales price would have been reached with this<lia-

bility in mind; that therefore the Company has received in

the form of a lower purchase price the money represented

by the pension obligation accrued as of 1956; that there were

1,000 to 1,200 employees when Porter took over as contrasted

‘with approximately 200 employees after termination; that

as of 1959 only 250 pension applications had been filed.

The Union argues further that the Company ignores

the income side of the pension plan, focusing its attention

on the outgo side—the express obligation to pay’ pensions

to employees who attain age 65 and have at least 25 years

of continuous service; that however, the 65/25 eligibility

82a =: 3 Appendix G

requirements contemplated that the plant would continue ;

that labor contracts, although they specify a fixed short

term of one, two or three years, actually contemplate a con-

tinuing relationship; that thus they provide through de-

ferred wages for such benefits as longer vacations for 20

‘years of service, pensions at specified ages, severance pay,:

ete.; that this concept is part of the nature of the labor,

contract and is so recognized by ar bitrators' and by the

Courts.

Thus, the Union concludes, while the contract expressly

provided a bargain which obligated the Company to pay

pensions only to those employees who meet the 65/25 eligi-

bility requirements, it also contemplated’ that the partiei-

“pants would gain the benefits of the deferred wage payments

negotiated in 1950, that the bargain in 1950 did not con-

template that the Company could close the plant and take

the deferr ed —_— for itself.

(12)

THE FINDINGS

ARBITRABILITY

The Company is-not persuasive when.it contends. that

the question of when pension payments start is not a mat-

tex of eligibility and therefore not arbitrable. The pension

issue before Buckwalter was whether employees terminated

by the Company’s movement. of most of its plant to Dan-

ville must be 65 years of age and have 25 years of continu-

ous service, as specified in the contract, to be eligible for

pensions. The courts had already decided that this issue

did not involve ‘‘broad labor policies’’ and ‘‘plant-wide

‘wage adjustments’’ and directed arbitration. And Buck-_

_ walter decided, as set forth in Paragraphs 1 through 3 of

1. Wamsutta M ills, Inc. and Textile Workers Union of America,

Arbitrator John A. Hogan (34 LA 158, September 9, 1959).

Appendix G ‘ 83a

his Award, whether a terminated employee need be 65 or

- need have 25 years of = service or neither in order |

to be eligible for a pension.*

Now the parties disagree as to the interpretation of

Paragraph 1: whether Buckwalter intended that a claim-

ant is eligible for a pension upon ter mination, as the. Union

-argues, or upon reaching the age of 65, as the Company

maintains. Thus the basic question remains a matter of

eligibility—-must one be 65 years of age. ee |

Moreover, this Arbitrator’s jurisdiction wis in fact

defined at the hearing, as the following excerpt. from the

_ transcript shows (Tr. 7- 13):

“THE ARBITRATOR: My jurisdiction then

comes under this Court Order? .

“MR. MADEIRA: Your jurisdiction comes under

all the documents. :

“THE ARBITRATOR: Under all the documents,

including this Directive of the Court, and at issue, here

is Paragraph 2; is that correct?

“MR. WILDERMAN: When you say his Order,

_ you are referring to the Order of December 7, 1964,

Mr. Crawford?

“THE ARBITRATOR: Yes Judge Lord’s.

“MR. MADEIRA: My understanding is that

that is correct, sir, and your jurisdiction comes from all

1. The Circuit Court of Appeals would not enforce Paragraph 2

of the Award—not because the fssue was not a “problem of eligibility”

—but because the Award was not based on “any practice evidencing

. [deviation] from the plain’mandate of the eligibility clause.” Had

there been such evidence, presumably Paragraph 2 also would have

been enforced as was Paragraph 1. 3

+

84a . Appendix G /

the documents, and We are particularly concerned with

paragraph 2-of Union’s exhibit 1.

“MR. WILDERMAN: Which is... [Judge

Lord’s] Order of December 7,-1964.’”- e

Accordingly, the Arbitrator understood, and under-

stands, his jurisdiction to include any dispttes ‘‘as to the

interpretation and application and/or method of enforce-

ment, including the formula for payment, of the terms of _

paragraph 1 of the arbitration award.’’ In fact, this is’the

only dispute*among ‘‘all the documents’’ which has not

‘already been decided.

The Court stood ready’ to decide any differences over

the meaning or application of the Award and the formula

formula for its payment. The’ parties, instead, brought

their dispute over the Award to an arbitrator. It is hardly

persuasive therefore when one ‘party says the arbitrator

does net_have the authority to decide differences over the

interpretation and formula for payment of the terms of the

Award, This decision, of course, must be based on the

Award, opinion, contract, evidence, arguments, court ac-

tions, and arbitration promise on

(14) —

which that Award was based.

The following quotation from United Steelw orkers of

America v. Enterprise Wheel and Car Corporation, 363

U.S. 593 (1960) at 597 provides guidance for the arbitration

in performing this function:

‘*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

1. Quoted at p. 3 of this opinion.

_

Appendix G - 85a

- 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 situ.

ations. .The draftsmen may never have thought of

what specific remedy should be awarded to meet a par-

ticular contingency. Nevertheless an arbitrator does

not sit to dispense his own brand of industrial justice,

_ He may of course look for guidance from many sources,

yet his award’ is legitimate only so long as it draws its

essence from the collective bargaining agreement..

When the arbitrator’s words manifest an infidelity to

this obligation, courts have no choice but to refuse

enforcement of the award.”’

‘Arbitrator Buckwalter: relied on this case and on

United Steelworkers of America v. Warrior & Gulf’ Navi-

gation Co., 363 U.S.574, 581-582 (1960) :

‘*The labor arbitrator’s source of law is not con-

fined to the express provisions of the contract,.as the

industrial common law—the practices of the industry

and the shop—is equally a part of the collective bar-

gaining agreement although not expressed in it. ...”’

And he found that men who had not yet reached age °

65 at time of termination shall be paid a full pension and.

that the parties should work. out a formula for payment.

The Court held this Award to be within the scope of the

arbitration promise. Surely the deciding

(15)

of a dispute over the interpretation of that Award and the

- fashioning of a formula for its payment is within the scope

of the court ruling and the arbitration promise.

ws

86a . Appendix G

In recapitulation, the Company agrees that the Arbitra-

tor’s jurisdiction comes from ‘‘all the’ documents”’ includ-

ing Judge Lord’s December 7, 1964 order. But it contends

that the Arbitrator may not decide any question other than

eligibility. This argument overlooks the fact that Buck.

walter had arbitrated eligibility and issued.an award which

provides full pensions for employees who had not yet

reached age 65 but had 25 years or more of continuous serv-

ice at time of termination and that a formula for payment

be worked out by parties.

The Circuit Court of Appeals ides Paragraph 1 of

the Award. The District Court issued its order of Decem-

ber 7, 1964, which intends that differences or disputes ‘‘as>—

to the interpretation and. application and/or ‘the method of

enforcement, including the formula for payment”’ be de-

cided.’

Therefore, the Company position—that the Union’s

request for payment of pensions as of date of termination

and the ingredients of the formula for payment are not

arbitrable—is incorrect. To the contrary:

1. The Arbitrator’s jurisdiction includes the issues in-

volving ‘‘interpretation and application and/or the method

of enforcement, including the formula for payment’’. And

as the Supreme Court held in Enterprise Wheel and Car

Corporation, arbitral

(16)

interpretation and application includes formulating reme-_

: dies:

2. In any event, the crucial question, whether 25 years

or more of continuous service alone qualifies employees for

Appendix G 87a

pension, is a matter of eligibility, which admittedly is within

the Arbitrator’s jurisdiction.’ :

3. This question was decided by the Buckwalter Award.

(17)

IS AN EMPLOYEE WITH 25 YEARS OR MORE OF

SERVICE ELIGIBLE FOR A FULL PENSION AT

‘AT AGE 65 OR AT TIME OF TERMINATION.

Buckwalter opens his discussion of pens:ons as follows:

‘‘The Demand for Arbitration with respect to

pensions reads: ‘The Union grieves that the Com-

pany has misinterpreted and misapplied Article XX of

the Agreement insofar as the Eligibility for pensions of

the employees affected by the Company’s movement to

Danville, Virginia is concerned.’

_ The grievance requested pensions for all the employees

who were displaced by the Danville move. These employees

were divided into three groups: those who had twenty-five

years of service but were not age 65; those who were 65:

years of age but did not have 25 years of service; and

thirdly, employees who had neither age nor service to meet

the express provisions of the contract. 3

1. Should it be decided in the courts that this question is a matter

of formula for payment of the Award rather than eligibility (contrary

to this Arbitrator’s.conclusion) the issue would have to be decided by

the Arbitrator. In doing so-he would be entering the situation after an

award had been issued and would be deciding a formula for payment of

that Award. In this role the Arbitrator decides that the payment of the

pension per Section XX-D should begin immediately after termination.

For this conclusion is most consistent with the spirit and logical struc-

ture of the Buckwalter Award, and is the most consistent with the

Disston practices.

88a A ppendix G

Par “ouih 1 of the Awad reads in part as follows:

‘Hach employee who, at the time he was ter mi-

nated, had completed twenty-five. years or more of

service, but had not yet reached age sixty-five, shall be

paid a full pension.’

get ‘‘The formula for payment. to be worked out by ¢

H. K. Porter Company, and the Union.”’

As written, the Award provides that the gr ieyants shat

be paid a full pension upon termination.

In making his award Buckwalter interpreted and ap-

plied Section XX-C in the circumstances of the case—the

‘removal of a large part of the plant to Danville and ‘the

termination of the grievant’s employment—to determine

which of the three groups claimants, if any, were eligible

for pension payments.

(17)

Section XX,.Pensions, Sub-Section C, Eligibility, reads

as follows :.

‘‘Basie yearly pension silowenes (without Social

_ Security) which shall be paid a retired employe who

has reached the age of sixty-five with at least twenty-

five years of continuous service with the Company, shall

depend upon two conditions:

‘‘1. Number of years of continuous service the ~m-

ploye has with the Company. The length of

continuous service of an employe shall be com-

.puted from the date on which he first began to

work.... |

‘‘?. The amount of the employe’s average regular

earnings... ”’

Appendix G ate 89a

Thus when Buckwalter held that employees who had

not yet reached age 65 but who had completed 25. years or

more of continuous service were eligible for pensions, he

ruled that the pensions were payable upon termination. For

. Section XX-C is the only place in the contract that specifies

when pension payments begin. Pensions, therefore, be-

come payable upon achieving eligibility. Had Buckwalter

intended a result different from the normal operation of

Section XX-C as to when payments start, he would have

said so—as he did with respect to eligibility. Thus the lan-

guage of Paragraph 1 of Buckwalter’s Award intends pen-

sions to begin as of date of termination.

The same conclusion is reached by a comparison of

Paragraphs 1 and 2 of the Buckwalter award. Paragraphs.

1 and 2 alike provide pensions for each employee who met

certain qualifications (in one case 25 years of continuous

service and in the other age 65) at time of

(18)

termination. Obviously there’can be no basis for delaying

payment of pensions in Paragraph 2 because the employee

has already reached age 65. Inasmuch as the Award does

not distinguish between Paragraphs 1 and 2—between em-

ployees who are already 65 and those who are not—the

Award shows’ that Buckwalter intended that pension pay-

_ments for Paragraph 1 employees begin upon termination as

they do for Paragraph 2 employees. Had Buckwalter in-

tended otherwise, it would seem that he would have written

in Paragraph 1 ‘‘shall be paid a full pension when he reaches

65 years of age’’, especially since he was interpreting the ©

age 65 eligibility requirement as not being applicable to em-

ployees who found themselves in the circumstances of this

ease. Accordingly, the reasonable interpretation of the

Award is that it means what it says—pensions begin upon

termination.

RR a a ie a Se

90a ae Appendix G

Turning from the Buckwalter award, examination of

his approach to the pension question and his evaluation of

the practices, as described in his opinion, affirms this inter-

pretation of his Award. He starts his decision of the pen-

sion issue (after citing the relevant contract provisions)

with the principle:

‘It is well accepted that a pension is paid primarily

because of years of service and not because an employee

has attained a certain age.”’

He then turns to ‘‘the Law of the Shop’’, the actual prac-

‘tice followed in the Tacony Plant with respect to the deter’

mination of pension |

(19)

eligibility, and discusses twenty of the 28 cases in evidence.

His first category is two cases where an arbitration.

award declared two men ineligible for pensions. In spite -

of this the Pension Board granted them pensions ‘‘because

of the long period of total employment.’’ His next category

is five cases where the Pension Board increased pensions

over the calculation because of long service. Another large

category is seven cases where the men had less than 25—

years’ continuous service but were given pensions because

of their long total service. He points to two eases in which

men under age 65 were awarded pensions because. of long

service. He categorizes three cases where because of the

curtailment of operations and their long total service pen-

sions were increased until Social Security became effective.

Then he cites the case of 46 year old Robert Kessler who

was awarded a pension because of his close to 30 years’

service and his physical disability. Concerning it, Buck-

walter says:

Appendix G 9la

‘‘The Arbitrator directs attention to the fact the

labor agreement in effect at that time provided for

pensions for employees who had reached the age of 65

with at least 25 years of continuous service, and for

employees who had 30 or more years of continuous

service with the Company and who had reached the age

‘of 60. Attention is directed to the fact that Kessler

fell into neither of these categories . . . Although the

Agreement then in effect contained no provision with

respect to special consideration in cases of physical

_ disability and hardship, nevertheless the Pension Board

saw fit to give weight to his physical disability in ar-

_ riving at its decision to grant him a pension.’*

He continues:

(20)

‘¢| | Examination of the decisions of the Pension Board

over a span of several years clearly indicates that it

was the practice of the Board to abide by the spirit, .

not the letter, of the eligibility clause. The Board

followed a very humane and social approach in han-

dling cases where there was doubt as to eligibility. In

numerous instances where an employee had less than.

25 years of continuous service a pension was granted:

because ‘special consideration was given because of a

long period of total employment.’ Instances were

cited of pensions being granted where the workers *

(Snyder and Bamford) had not met the age require-

ment but had long total service (44 years and 41 years).

The Personnel Director, Mr. Norton, testified that

breaks in service caused by the 1930 depression were

generally not construed as breaks. In several instances

the closing of a shop or the curtailment of the opera-

_ tions of a shop was a factor influencing the decision of ,

, ..

IE RIS OPA TS PaRekae «

se RS IPT fone

9:

a

Appendix G

the. Pension Beard. In one instance a pension was

given because of a physical disability, to an employee

. who was only 46 years of age. .This was done in spite

of the fact that the labor agreement made no provision

for a pension because of. physical disability.

‘The fact that the Perision Board granted pensions

to 2 employees who had been declared ineligible by an

arbitrator seems tc clearly indicate a practice of broad

and understanding application of the eligibility re-

‘quirements.

‘Tt is the view of the Arbitrator that the various.

cases cited above, as well as others set forth in the

transcript, clearly indicates the Pension Board applied

a broad, rather than a narrow, concept of eligibility. . ..

‘The essence of the Union’s position with respect.

_ to pensions is: (1) failure of numerous workers to _

qualify under the eligibility provision of Section XX,

because of the move to Danville, will inflict upon those

terminated employees a severe and permanent economic

loss ; (2) the past practice over several years has been, -

in numerous exceptional or hardship cases, such as the

instant case, to relax the precise written eligibility re- ~

quirement.’

“<The request of the Union for pensions for those

who, at the time of their termination because of the

Danville move, had completed 25 years of service but

were not 65, and for pro-rata pensions for those who

were 69, but had

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not completed 25 years of service, seems entirely. rea-

sonable and in line with earlier decisions of the Pension _

Board. Surely if breaks in service during the de-

WES

Appendix G 93a

pression of 1930 were overlooked, and surely if in

1954, a worker with 214% years was given a pension

because of the closing of the File Company, it would «- .

not be violating past practice in this plant for the,

Arbitrator to grant the Union’s request. Nor would:

the Arbitrator be adding to the collective bargaining

agreement since-he would not be going beyond past

practice baneee! —" to the inter pretation of crested

for pensions.’

—

Thus in the practite Buckwalter saw years of service

as being the source of pensions ; ke saw numerous instances

where pensions were granted employees with less than 25 °

years’ continuous service; instances where pensions were

granted employees who did not meet the agé requirements ;

and several instances, where exceptions to the express pro-

visions of the plan had been influenced by major depression

or curtailment of plant operations. He concluded that this

“is a hardship case and so the past practice would dictate

a relaxation of the eligibility requirements. —

He found authority in these practices of interpreting

the eligibility provision to award full pensions to men with

25 years of ‘seryice irrespective of how young they might

be, and to award partial pensions to men 65 with lesser

years of service in proportion to their years of service. . ©

Because there was no practice he denied pensions to those

who had neither the service nor the age, and also severance

pay, although jhe ‘‘strongly suggested’’ that the parties

make an effort to arrive at an agreement for severance pay. |

Thus Buckwalter’s analysis of the practices and the

‘law of

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the shop’’ concept upon which it was sant makes clear,

that’ he intended his Award to provide for payment of a

94a _ Appendix G

- full pension to Group 1 sain upon termination. This

practice. provided that the pensions begin at: time of retire-

ment. By analogy, in this case, at the time of termination.

Disearding the 60/30 early retirements under the Dis-

ston contract, three instances were cited to Buckwalter of

‘pension payments beginning before age 60: Thomas Bam-

ford, age 58; Robert Kessler, age 46; and George Ashcroft,

age 54.1 In none of these instances was the payment of

pensions delayed untii the applicants met the express age

requirment instead of payments beginning upon approval

of their applications. , .

| In short, in light of Buckwalter’s view that ‘‘the past

practice ... has been, in numerous exceptional or hardship

cases, such as the instant case, to relax the precise written

eligibility requirement’’,:and in view of the fact that the

only practices with respect to under age employees was to

start payment of pensions immediately rather than waiting

to age 65, it seems apparent that Buckwalter intended what

he wrote—that pensions start at the time of.termination. .

Turning-from Buckwalter’s analysis of past practice, .

examination of the transcript and briefs submitted to Buck-

walter also affirm

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the conclusion that he intended his Award to apply as he

wrote it—for payment to start at the time of termination.

1. The Company points out in a footnote in its brief (p. 15) that

‘ Kessler and Ashcraft were physical disability cases, which occurred

prior to 1957, since when the parties have provided for such hardship

cases in Section XX-J: But Buckwalter knew this when he evaluated

the practices. His award was based on the Disston practices and his

conclusion that they were binding on Porter, which finding was upheld

by the courts. vs

Appendix G ss | 95a

The question of when the pension payments should start

was raised several times by the Union. :

On page 6 of his opinion Buckwalter reports the Union

position as follows ::

‘8. With respect to pensions there are 3 groups:

‘fa. Those terminated employees who have ren-

dered twenty-five years or more of service but had not

yet reached age sixty-five at the time of termination.

-(Union Brief, page 52) Pensions 4s a fringe benefit,

are negotiated payments for service, i.e., for years of

service. Pensions are not paid because an employee

has reached a certain age. For the Company to empha-

size ‘age sixty-five’ is to unjustly withhold from an

employee his pension which he has earned. (Union

Brief, pages 56-57) This group is entitled to full pen-

sions.

‘‘b. Those terminated employees who were sixty-

five years of age but had not yet put: in twenty-five

years of servite at the time ‘of termination. Since

Porter has made it impossible for these aged employees

to continue to work it should not be allowed to profit

by its unilatéral act

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