# Appendix — H. K. Porter Co. v. United Saw, File & Steel Products Workers > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385604_0857%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1969 - **Citation:** 395 U.S. 964 ## Text { (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 : Page ee, en Pree er ee eye ees eee ee nk la APPENDIX B .......--2eeeteeeeces i haexeaeceaes cA RES S lla - APPENDIX EB cvcee ter ceeenee cea eee ons a Peee te Te eT 12a APPENDIX D Re oe een ees ey ren bok waea se 46a Pet mre mT errr we etree ee ree nets oe oo ae re er AGREV MED AUS ERRNO ERSTE REUSED 69a APPENDIX G ...... SS Orme ee ey ee ee errr 7la Pe) eh, rer rarer rere es ree ee ce hee ae 1l4a APPENDIX I .......- PE ETO ED mp ee ree yr Ts 123a pee. yt eee re rer Shaner erenee Senin: 135a ' APPENDIX K POMP ah Fees Cortney Stem PO TK are Fors See 14la 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 ‘— 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.’ “ a (24) si . If Porter insists on requiring any sails in Group 1 to whom a full pension is awarded to wait until age 65 as a prerequisite to the start of the monthly . pension payment to such terminated employees in Group 1, then such employee would wait rather than be deprived of pension; however, Porter could very well afford to grant pénsions immediately to the terminated employees in Group 1. And. if Porter further insists on working out a formula as to the amount of monthly pensions for those employees for the veriod of time be- fore any such employees become age 65 with full pen- sions becoming payable as soon as age 65 is reached, then that could be worked out—Porter and the Union may even be able to agree upon the payment of a lump sum approach. Arbitrator Buckwalter should not hesi- tate to award pensions to any and all groups merely because a formula for payment may have to be worked out either by Porter and the Union or. by Arbitrator Buckwalter if there is a disagreement thereon between Porter and the Union. Thus Buckwalter had the issue of when full pensions ¢ are payable to Group 1 employees sharply presented by the Union: immediately for ‘‘Porter could very well afford to grant pensions immediately to the terminated employees - in Group.1’’; or ‘‘If Porter insists on requiring any person in Group 1 to whom a full pension is awarded to wait until age 65..., then such employee would wait rather than be deprived of pensions’’.! . Therefore, it is not reasonable to 1. It may be the Union would have settled its claims for less. The Arbitrator’s function in this matter, however, is not to determine what Buckwalter might have done but to determine what he did do. Appendix G em. 97a conclude that when Buckw alter ruled—that an employee ‘‘who, at the time he was terminated, had completed twenty-five years or more of serviee, but had not yet reached age sixty-five, shall be paid a full pension’’—he intended such employees to wait to age 65. Since the issue was so clearly drawn by the Union, he was obliged to (25) rule that the grievants shall be paid a full pension at age 65 _ had he so intended. | - ) In short, Buckwalter granted the Union demand which asked no delay. He wrote: ‘‘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 reasonable and in line with earlier decisions. of the Pension Board.’’ As pointed previously, inasmuch as he does not distinguish between.the two groups and since there is obviously no basis for delaying payment of pensions _for the latter employees because they had already reached age 65, pension payments also begin upon tae for the former group. The arguments which the Cena advancés against the foregoing considerations do not stand up. As to the ‘first argument, the Company points out that in Aitgust 1959 the Union requested that: ‘‘All employees who have 25 _years of service or better and whose jobs are being discon-. tinued due to their departments ‘being moved to Danville, shall receive a pension when they reach age 65 in accord- ance with the present Pension Plan.’? (Company empha- sis) The Company coritinues that there ean be no plainer '_ recognition on the Union’s part that pensions should not be payable until the retired employee attains age 65. ’ Se RR nh { é . 98a | Appendia G Dispositive of the Company argument is the fact that . it is citing a part of a counter-proposal to a Company ‘proposal for severance * (26) involving severance pay and pensions. pay. The Union knew the Company’s position on pensions was that only terminated employees who met the express terms of the plan would receive pensions. And the Union - sought to work out:a compromise involving severance pay and pensions. A counter-proposal is an n effort to persuade rather than to assert a right or interpret a contract. As such it does not have decisive value in determining the Union’s evalu- ation of its rights and Buckwalter’s intent. In fact, dealing with severance pay in his opinion baker begins: “SEVERANCE PAY ‘‘On page 123 of the transcript of the hearing the Union states: ‘If the Arbitrator is of the opinion that a proposal once made and a“ecounterproposal 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.’ ”’ ! In relying on the express terms of the Agreement the . Company repeats the argument which it made before Buck-. walter and the courts, contending that an interpretation of the Award to provide for pension payments before age 65 is a deviation from the express terms of the Agreement. The courts decided this question. It ruled that Buckwalter acted entirely within his competence in evaluating the pen- sion practices and relying on the ‘‘law of the shop’’. Appendix G 99a The Company is.also not persuasive when it argues al- ternatively that there is not a well documented practice in support of immediate payment of pensions to underage em- ployees. Buckwalter wrote that pensions were paid for years of service; and more specifically, in the only cases (27) in evidence before him of approval of pension applications from underage employees, pension payments began immedi- ately. Unlike the ruling in Paragraph 2 of Buckwalter’s Award, where the granting of pensions to employees with less than 25 years of service was not supported by a single instance of past practice, here there are three cases of pen- sion payments to employees under the express age require- ment. And each instance represents a considered judgment. For as Company witness David W. Singley testified before Buckwalter, in the administration of the pension plan ‘‘fac- tors were weighed and evaluated seriously before such devi- ations [from the contract] were granted.’” Accordingly, the Company’ s general proposition that a few instances do not establish a practice is not applicable to a pension plan. Not only does each deviation from the plan represent a careful judgment but also a basic consid- eration in pension plan administration, both within the Bureau of Internal Revenue and without, is that the plan not be discriminatory. Thus if the administrator of the plan knowingly grants pensions to an applicant not entitled under the plan, all similarly situated employees at the least are entitled to assert a claim for like treatment, on a non- discriminatory basis. In short, one or two instances may, - in given circumstances, establish a practice or amendment in pension plan administration—especially in a plan in “a, Transcript of December 22, 1961 hearing, p. 198. 100a — Appendiz G | which pensions are paid on a current expense basis. There- _ fore, to hold that the grievants with 25 years or more of continuous service must wait until age 65 before payment of a full pension (28) begins is to interpret Paragraph 1 of Buckwalter’s Award inconsistently with the practices. | GRIEVANTS DECEASED BEFORE AGE 65 In Paragraph 1-of the Award Arbitrator Buckwalter ruled that: ‘‘Each terminated employee shall receive a $1,000 non-contributory life insurance nai as provided for in Section XIX-A. Section XIX-A provides in part that: ‘‘The Company will provide to all employees covered by this Agreement ... a $2,500 non-contributory Life Insurance policy until re- tirement date; and on the First of the month following the’ employee’s pensioned retirement, a $1,000 non-contributory Life Insurance policy while on pensioned retirement .. .?? (Company emphasis. ) The Company argues that it is is appar ent froni the above language that the contract contemplated that a retired em- ployee would get the benefit of a $1,000 non-contributory policy promptly. after he went on ‘‘pensioned retirement’’; that pensioned ‘retirement mearis simply, when the employee is receiving pension payments; that since the employee’s pension is not payable until age 65, he does not qualify for the life insurance policy until he reaches age 65; that more- . over Section XIX-B provides that an employee’’... being — laid-off for any reason, or having quit, is removed from insurance on the midnight of the employe’s date of termi- nation of employment (usually the last day worked).’’ (Company emphasis.) | Appendix G oe 10la The Company’s position is not convincing for the same reasons (29) ‘set forth in the preceding section of the opinion. It was found there that Buekwalter decided in Paragraph 1 of his Award that employees who had completed 25 years or more of service upon termination but who had not yet reached age 65 shall be paid a full pension beginning as of - the date of termination. Thus for these employees ‘‘pen- sioned retirement’’ begins upon termination. Therefor e, on the first of the month following their ter mination, these employees qualified under Section XIX-A for a $1,000 non-. contributory life insurance policy sis the duration of their pensioned retirement. It also follows from the foregoing that the estates of Group 1 employees who have died since their termination are entitled to the monthly pensions from time of their ter- mination until their death. For these employees had com- pleted 25 years of continuous service as of date of termi- nation and their pensions are payable as of that date under Paragraph 1 of the Award. * WHAT IS A ‘FULL PENSION” The Company argues that if a pension allowance is found to begin before age 65, it must be actuarily reduced or else the grievants will receive more than other employees under the pension plan. It maintains that the only way the pension allowance can be kept within the four corners of the contract, if payable before age 65, is to determine actuarily the allowance payable ivom age 65 to death and reduce the payments proportionately to the lower starting age. The fault with this argument is that Buckwalter ruled 102a ; Appendia G ~ (30): that Group 1 employees, those who had completed 25 years or more of service at the time of their termination but had not yet reached age 6 qualified for full pensions. . Looking to the practices, he did not find in the circumstances ef the case—the removal of most of the plant to Danville and the consequent termination of. employment of these employees —a compelling consideration in the fact.that they did not meet the age eligibility requirement. To the contrary, as pointed:out previously, he found ‘entirely reasonable’’, the Union request for full pensions for Group 1 employees and for pro-rata pensions for Group 2 employees, those who were 65 at time of termination but had not yet completed 25 years of continuous service. ‘‘Nor’’, he continued, ‘‘would the Arbitrator be adding to the collective bargaining agreement since he would not be going beyond past practice with respect to the interpreta- tion of eligibility for pension.’’ Buckwalter accordingly held that Group 1 employees, as contrasted with Group 2 employees to whom he awarded pro-rata pensions, were - eligible for full pensions. The absence of any reference to actuarial reduction in Paragraph 1 of the Award or in the opinion is all the more significant in view of the fact that the Union mentioned this possibility..In the Conclusion of its Brief (p. 60) the Union pointed out that three rulings were possible insofar as Group 1 employees were concerned: they ‘‘may now be granted their full pensions at once or required to wait until | age 65 is reached or now be paid a lesser pension (actuarily (31) — : ip ee ascertained) until reaching age 65, at which time the full pension would be paid’’. The Union urged the first alterna- tive upon Buckwalter as follows: ‘‘Porter should not insist — mt Appendix G eee 103a upon delaying the payment of the full pension and Arbi- _ trator Buckwalter should so award. . .”’: Buckwalter accepted the Union position. He awarded Group 1 employees full pensions as contrasted with pro-rata pensions for Group 2 employees. He did not: award actu- arily reduced pensions. As the Union emphasizes in this proceeding, there is no practice—not one instance—of actu- arial reduction. Thus the Buckwalter Award of full pen- sions was based on the practices; and to interpret it to provide for actuarily reduced pensions is to deviate from Buckwalter’s Award. It is not this Arbitrator’s function to decide why Buck- walter reached the conclusion which he did on this point. But it is easily conceivable (and even probable) that on this score he was giving the weight which he deemed appropriate to the Union’s unjust enrichment’? argument.. The Union contends that the language ‘‘full pension” of Paragraph 1 of Buckwalter’s Award requires that the claimants be paid the amount yielded by the calculation in _ Subsection D plus the amount required to bring them to the - minimum guaranteed pension of $135.00 ($150.00 in the Sup- - plement Agreement, dated September 15, 1958). The pen- sion allowance provided in Section XX is defined in Sub- sections D and E as follows: (32) ‘““D. AMOUNT. Pension allowance shall be computed by multiplying 1% of the average regular yearly earn- ings (as determined in paragraph XX C-2), by the number of years of continuous service up to the date of retirement. under the eligibility provisions. This yearly allowance shall be paid to the retired employee semi-monthly, monthly or otherwise as the board may determine. ME NLD ORR IANNIS 104a Appendix G ‘“&. MINIMUM PENSION. Should the formula in paragraph XX-D plus primary Government Old Age : Pension (as exists now or is later amended) develop a pension of less than $135 per month, the Company shall add a sufficient amount to its portion of the monthly pension to bring the combined total of $135 per month. - This additional pension payment by the Company shall only be made if the employe is sixty-five years of age or over with twenty-five or more years of service at the time of retirement....”? The Union argues that Buckwalter found that age 65 was not essential to receiving a pension ; that ‘‘full pension’’ includes the minimum guarantee as an integral part; that to deny minimum guaranteed pension on the ground that age 65 is required would constitute a violation of the Award. . Decisive against the Union claim is the fact that under the Disston contracts! and practices the minimum guarantee was not paid to (33) 3 underage retirees. Morever the Union construction of the “Award would require the Company to stand in the shoes of the Federal government and provide the grievants Social Security benefits. The Union concedes this result by its offer — of a compromise solution, which would give the Company credit for primary Social Security benefits for the period prior to age 69. - Furthermore, the practices eoncerning early retire- ments were conflicting. There were three such cases in which retirement was caused by plant curtailment (Her- manowicz, Hutchinson and Dutcher). In these cases the ~ Pension Board while not applying the-minimum guarantee 1. Section 8 of the March 1, 1948 Agreement, as amended.—Pen- sion Plan. Appendix G 105a . before age 65 granted incr ‘eased pension benefits until they qualified for. Social Security, at which time: the Bchivwscag three who did not meet the 60/30 eligibility sequireimente (Bamford, Ashcraft and Kessler) and two who did not meet - the 65/25 eligibility requirements (Alley and Synder), were not made up to the minimum guaranteed pension but re- ceived only the amount yielded by the calculation of Sec- tion XX-D. And in none of these cases does the evidence indicate that the men were given the minimum guaranteed pension when they reached age 65. The existence of some diversity in practice is perhaps the main reason why Buck- walter directed the parties to work out a formula for the application of the pension allowance provisions and prac- tices. Accordingly, ‘‘full pension’’ may not be read to require: the payment of the minimum guarantee. As to a ‘pension allowance greater than the calculation yielded by Section XX-D, this would be a matter of formula for payment. Under the early retirement provisions of previous contracts and under the practices early retirees received the calcula- tion but not the minimum guarantee and in most eases did not ’ .” (34) receive anything ‘more. Hence the Arbitrator sees no reason in wring the formula for payment of full pensions to award more than the calculation. For Buckwalter’s Award was based on the practices. - ELIGIBILITY OF 24-YEAR MEN - The Company contends ten of the grievants, with 24 years of continuous service at the time of termination, are ineligible for’ pensions. It says that the Union relies on a 4 NEPA EE VEIN eB wT ty ‘ 106a Appendix G past practice but that the past practice shows there was © no deviation from the provisions of the collective bargaining agreement. Sections VI-A of the contract states in pertinent part: «| An employe’s continuous plant service .. . shall be broken only in the case of: , « granting of pension benefits 40 grievants with only 24 years of service certainly goes to eligibility, it flies in the face of the Court of Appeals ruling that the 25 years of service re- quirement could not be dispensed with.» The Buckwalter Award as enforced by this Court specifically requires 25 years of service. : : Paragraph 6 is vacated iasofeke 4s it directs that Holmes and Shuttlew ‘orth should be paid full pensions prior to the. time that each attains sixty-five years*of age. In no_case should any payments be made to any grievant prior to the time he reaches the age of 65. Paragraph 7 will be enforced insofar as it pertains to eligibility. Thus, each employee who, at the time he was terminated, had completed twenty-five years or more of . 3. The Court of Appeals in H. K. Porter Co. v. United Saw Workers, 333 F. 2d 596 (3rd Cir. 1964) ruled that while there was a _ basis in view of prior practice, of relaxing the 65 years of age require- _ ment for employees with 25 years of continuous service, there was no such similar precedent for granting pensions, even pro rata, to em- ployees who had reachéd 65 without serving 25 years. The 25 years of service requirement could not be relaxed. ~_" Appendix H nee 12la service, but had not yet reached age sixty-five qualifies for a $1,000 non-contributory life insurance policy as_of the first of the month following his becoming eligible for pension payments, i.e. at the time he reaches the age of 65. Obvi- ously, since a grievant doesn’t qualify for the life insurance until he reaches his sixty-fifth birthday, if he dies before such date he cannot receive such a policy. Thus, that part of paragraph 7 pertaining to the payment of benefits under said policies to the estates of grievants who died prior to attaining sixty-five years of age is vacated. Paragraph 8 will be enforced as it pertains solely to eligibility. Paragraph 9 will be enforced. 122a ~ eras, Appendix H ORDER “AND NOW, to wit, “this 4th day of ie il, A. D. 1968, it is ORDERED that the arbitration award of April 19, 1967 - be and the same is hereby VACATED as to the following: Paragraph 1 in its entirety. thenealh 2 insofar as it pertains to calculation of payment. ‘Paragraph 3 in its eer: Paragraph 4 in its entirety. Paragraph 5 in its entirety. Paragraph 6 insofar as it prescribes payment. of pen- sions before the age of sixty-five. Paragraph 7 insofar as it pertains to grievants de- ceased prior to their reaching the age of sixty-five. All other portions of the awate be and the same are hereby ENFORCED. @ip IT IS sO ORDERED. - JOHN W. LORD, ee Zz Appendix I ; 128a - APPENDIX I « Opinion of the Court of Appeals for the Third Circuit,—F. 2d—(3d Cir., 1969) ' UNITED STATES COURT OF APPEALS © For tue Tuirp Circuit * No. 17283 . H. K. PORTER COMPANY, INC. v. UNITED SAW, FILE AND STEEL PRODUCTS WORKERS OF AMERICA FEDERAL LABOR UNION NO. 22254, AFL-CIO, | : Appellant ————— AppeaL From THE Unirtep States Districr Court FOR THE Eastern District oF PENNSYLVANIA Argued November 21, 1968 _ ‘Brrore Ganey, FreepMan and Serrz, Circuit Judges. OPINION OF THK COURT (Filed January 10, 1969) 124a ; ay Appendix I FREEDMAN, Circuit Judge. This is an appeal by a labor union from the district court’s vacation of portions of an arbitrator’s award on the ground that they were beyond his authority. The controversy has had a long history and was before us at en earlier stage. , ‘ , In 1955 H. K. Porter Company, Inc., acquired the plant of Henry Disston & Soins, Ine., in Philadelphia, which it - continued to operate as a Division until sometime in 1959 when it announced its intention to move a large part of its operations to Danville, Virginia. The union, which had a collective bargaining agreement with the company, filed grievance claims relating to pension rights and severance pay on behalf of the employees whose positions were ter- -minated by the closing of the plant. These grievances were not settled and the union demanded arbitration which the company rejected on the ground that the dispute was not within the arbitration provisions of the collective bargain- ing agreement." In an action by the union under §¢ 301 of the Labor Management Relations Act (29 U.S.C. § 185),- the district court held the issues arbitrable (United Saw, 1. Section III-A of the contract provides that “[s]hould differ- ences arise between the Company and the Union . . . as to the meaning and ‘application of. the provisions of this Aubecouas, or should any grievance arise between the partieShereto, 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 dif- 7 ferences ...”’ in accordance with specified grievance procedures. « Sections FII-B and IV-A provide that grievances not settled under these procedures can be. appealed to an Impartial Chairman chosen by mutual agreement of the parties. Section XX-B, establishing a pension committee comprised of management and union representatives, provides: “Problems of. eligi- bility, within the terms of this pension plan that cannot be solved by this Pension Committee shall be the only pension problems subject to arbitration. ...” Appendia I —12da File and Steel Products Workers v. H. K. Porter Co., 190 F.Supp. 407 (E.D.Pa. 1960)) and ordered the company to submit to arbitration ‘‘subject to the provisions of the Col- lective Bargaining Agreement, the grievances with respect to pensions and severance pay insofar as such grievances arise under the ———— of the Collective Bargaining agreement, . . .”’* Following this order the parties chose W. Roy Buck- walter as the impartial arbitrator. On August 17, 1962, Buckwalter issued an. award rejecting the union’s dale for severance pay and ruling in favor of the company on some pension items and in favor of the union on others. The dis- trict court ordered enforcement of the award after the com- pany attacked it and the union coutiterclaimed for its en- forcement. .H. K. Porter Co., Inc. v. United Saw, File and Steel Products Workers, 217 F.Supp, 161 (E.D.Pa. 1963). On appeal we held that the arbitrator was not limited exclusively to the provisions ‘of the collective ‘bargaining agreement but was entitled to consider also thé pension practices which the parties had followed under the pension plan and that this justified paragraph 1 of Buckwalter’s award which held: “1, Each employee who, at the time he whs terminated, had completed twenty-five years or more of service, but had not yet reached age sixty-five, shall be paid a full pension. ‘ : 129 ‘©. +5 (misnumbered)—‘‘ Pension Plans Under Collective Barg.”’ 166 ss #6—Excerpt from President’s Pension Comm, 166 PROCEEDINGS MR. WILDERMAN: I would like to introduce as Union’s Exhibit No. ] an order and judgment of December 7, 1964, signed by Judge John W. Lord, Jr., of the United. States District Court for the Eastern District of Pennsyl- vania. Mr. Madeira, you have a copy of that, do you not? MR. MADEIRA: Yes. | MR. WILDERMAN: Paragraph 4 of this order and judgment reads as follows: ‘‘This court shail 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 differences or disputes arise between the parties as to the interpretation and application and/or the method of en- forcement, including the formula for 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.”’ Following this the parties have been unable to agree as to the interpretation and application and/or (4) the method of enforcement, including the formula for pay- ment, of the terms of paragraph 1 of the arbitration award. l44a . _ Appendix K Accordingly, the parties have agreed upon you as the Ar- bitrator to hear and decide as to the interpretation and application and/or the method of enforcemertt, including: the formula for payment, of the terms of paragraph 1 of the’ arbitration award as quoted and set forth in this order and Judgment. THE ARBITRATOR: The court still retains jurisdic- tion; is that correct? MR. WILDERMAN: The court would retain jurisdic- tion for the purpose of enforcing your award. in these pro- ceedings. Your award implements the order and judgment. MR. MADEIRA: I have no objection to the introduc- tion of that. If I could speak to Mr. Wilderman’s statement, that is the order of J udge Lord, and since then we have met many times with Mr. Wilderman in attempting to work out - various matters as contemplated. I feel, by the prior award of Mr. Buckwalter on these same grievances. I would like to call the Arbitrator’s attention to Section 20 (b) of the collective bargaining - (5) - agreement. If we can refer to it as the 1957 agreement be- cause we will be talking about a 1957 and perhaps a 1959 agreement, 20 (b), which is in the pension section of the agreement, states that, ‘*Problems of eligibility within the terms of the pension plan which cannot be solved’ by this "pension committee shall‘be the only pension problems sub-’ ject to arbitration, the company and the union to share in equal part the expense of the impartial arbitrator in any _such cases.”’ There is a similar provision in the pension plan section of the collective bargaining agreement back to the adoption of the negotiated plan in 1950. Appendix K 145a I was aware, with Mr. Wilderman, that we were coming to arbitration. I point this question to the jurisdiction of the Arbitrator in light of the background, as to whether this proceeding goes beyond eligibility of pergons. I do not know the specifics of what Mr. Wilderman raises beyond _ the question of eligibility. MR. WILDERMAN: I am following the order and judgment of Judge Lord, which followed the decision of the United States Court of Appeals, wh’ followed- the decision of Judge Lord rendered in the United States (6) District Court, which followed the award granted by Ar- bitrator Buckwalter. The order and judgment ‘speaks for itself. It states that, ‘‘In the event differences or disputes arise between the parties as to the interpretation and appli- cation and/or the method of enforcement, including the formula for payment, of the terms of Paragraph 1 of the. arbitration award as quoted above, then either party shall apply to this court under the same option for such action. as it deems appropriate’ ’; that you are to answer these mat- ters set forth in the order and judgment. Paragraph 1 is contained on the first page of the order and judgment. So that you are to resolve whatever disputes may be involved relating to the interpretation and application and/or the method of enforcement, including the formula for payment, uf the terms of Paragraph 1 of the arbitration award as quoted in order and judgment. MR. MADEIRA: I agree with Mr. Witdernian, that the documents that have been referred to do speak for them- selves. I am not here saying that if we get here beyond ‘mutters of eligibility that we are going to remove ourselves from the hearing. I am SOgee RE 146a ; Appendix K | Yee that as you decide these things, these are all done with the background of the contract, and that the contract has con- ‘sisténtly, since the pension plan was adopted, contemplated — arbitration in pension matters only on matters.of eligibility, - and I think this limitation is expressed or explicit in Buck- walter’s award where he refers to the formula being worked out among the parties. : If you don’t feel that it is-in the contemplation of the _ parties as set forth in the agreement that the Arbitrator should go into the formula, that is a decision for you to make, sir, in light of the contractual background. MR. WILDERMAN: As we develop the case you will see that this case has a long history; that the contract has been before four courts and one arbitrator, and we are now, as I say, without the necessity of repeating myself, dealing with the order and judgment and its implementation with regard to whatever disputes exist as to the matters which I have related, contained in the order and judgment. We in- tend to go into each and all of these matters and not te restrict ourselves just to who is eligible. That is not what the order (8) - : . and judgment says. It speaks for itself. It says let | this matter finally be resolved, and we are now firmly resolving it before you, Arbitrator Crawford. We. don’t anticipate, and I don’t think the company wants to go through four more arbitration hearings or court proceedings ad infinitum. The time has come to allow the procedure of arbitration to have this matter finally resolved. MR. MADEIRA: , Well, the order, if you will read it, doesn’t say any such thing as Mr. Wilderman claims it says. The order speaks for itself, and we can proceed with the Appendix K _ 147a background that we both stated, that the issues will frame themselves. We submit that you should view the proceed- ‘ings in light of 20 (b) of the 1957 agreement between the parties. | MR. WILDERMAN: We, of course, will not restrict ourselves just to the contract at that time. We have court proceedings that have intervened. We. have orders and judgments. We have an arbitration award. And to say that we are now going to go back to the original contract and have you interpret the original contract is to turn back the clock approximately four or, five years. (9) Before you today are questions, issues, matters to be resolved in accordance with the order and judgment. It is not for-you to decide whether people are entitled to receive - pensions or not receive pensions ; that is, whether or not you are going to give anybody a pension. Pensions are vested, _in accordance with Paragraph 2 of the order and judgment, — and says, “Bach employee, who at the time he was termi- nated had completed 25 years or more of service, but had not reached age 65, shall be paid a full pension.’’ That’s vested and you cannot now go to the contract to decide whether or not these people should get a pension. The courts have said, and Arbitrator Buckwalter has said, that these people get a pension, the formula for pay- ment to be worked out by H. K. Porter Company and the union, and does not restrict itself to only who is eligible, but — the formula for payment. -And that is a. broad, all-encom- passing situation. It is a formula. ‘‘Hach terminated em- ployee shall receive a $1000 non-contributory life insurance policy as provided for in Section XIX-A.’’ AI! of this is vested. That door is closed. As the Arbitrator you cannot now decide whether or not to grant insurance, or whether or not 148a re Appendia K (10) to grant pensions. Who gets the pension, as of whom they get their pensions, what constitutes 25 years of service or more, the computation of the pension, whether or not it’s to be funded, whether or not it is to be jointly administered as a trusted fund, are all matters encompassed within the formula. ; This is the formula for resolving how this money finally i8 going to get into the hands of these people, but whether or not they get pensions has already been decided, and there is‘a vested pension, and these are the matters which we are going to present to you and argue in detail and introduce testimony. And incidentally, I don’t know whether I entities the life insurance, but it is of course covered here, so we will _ go into the life insurance situation too. But as far as the courts have decided, each terminated employee shall receive a $1000 non-contributory life insurance ‘Boliey as provided for in Section XIX-A.. MR. MADEIRA: We are talking in the areas, I trust, of what, is being submitted to you for a decision here, and I would submit that we have grievances that were originally filed back in 1959. We have the collective bar gaining agree- ment. We have Arbitrator . (11) . co Buckwalter’s award. We have the Court of Appeals opinion, and we have the order of remand that is before you as Union’s Exhibit 1. And we are back here for the appropriate action of an arbitrator in light of these docu- ments, and what has gone before you. : The way I interpret all of these matters is that here is an award which allows approximately 41 individuals eligi- Appendix K 149a bility for full pensions and non-contributory life insurance policies when they attain 65. That’s our interpretation of this award. | Now, obviously there is a disagreement on that. Mr. Wilderman brings up these other matters. I feel we can answer each contention as we go along. One of the conten- tions, I repeat, is how far we go in an arbitration proceed- ing in light of the documents that are pertinent to this hear- ing, and especially in light of the jurisdictional question raised by 20 (b). But with the background of these docu- ments and the question of what is being submitted and what _ you are going to resolve, I think it boils down first to eligi- bility specifics, and I don’t anticipate we will have an area of considerable disagreement on most of the employees, the specific employees who are qualified : (12) under the award. se _ They are going to bring up, Mr. W ilderman says, other aspects of eligibility which there will be en on. That’s what we are here for. Then if you do decide, in light of all the hotheeunnd documents, you go further into these things, you obyiously ean go further, and we feel we have got an answer for each of the points Mr. Wilderman is going to raise. MR. WILDERMAN: Can we proceed? THE ARBITRATOR: My jurisdiction then comes — under this court order? MR. MADEIRA: Your jur aliuiion comes under all the documents. THE ARBITRATOR: Under all the documents, in- cluding this directive of the court, and at issue here is Para- graph 2; is that correct? wen” 150a ee Appendia K MR. WILDERMAN.: When you say ‘‘under this order’’, you are referring to the ordér of December 7, 1964, Mr. Crawford? THE ARBITRATOR: Yes, Judge Lord’s. MR. WILDERMAN: Off the record. (Discussion off the record.) | (13) MR. MADEIRA: My understanding is that that is correct, sir, that your jurisdiction comes from all the docu-_ ments, and we are particularly concerned with paragraph 2 of Union s Exhibit 1. MR. WILDERMAN: Which is the order of December CC * * ¢ --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385604_0857%3A2. Public record. Not legal advice.