Appendix — Leber v. Universal Music & Video Distribution, Inc.

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APPENDIX A — OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE SEVENTH

CIRCUIT DECIDED JUNE 9, 2003

In the

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

No. 02-4069

ALISON LEBER, ef al.,

Plaintiffs-Appellants,

v.

UNIVERSAL Music AND VIDEO DisTRIBUTION, INC., et al.,

Defendants-Appellees.

Appeal from the United States District Court

for the Southern District of Illinois.

No. 99-cv-4276-JPG—J. Phil Gilbert, Judge.

ARGUED May 19, 2003—Decipep June 9, 2003

Before EASTERBROOK, ROvNER, and Evans, Circuit Judges.

EASTERBROOK, Circuit Judge. Until four years ago,

Universal Music and Video Distribution operated facilities

in Pinckneyville, Illinois, that not only made compact disks

(CDs) but also handled returns of unsold or defective

products. Manufacturing and returns were separate

departments, though employees of both were represented by

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Appendix A

the International Leather Goods, Plastics, Novelty and

Service Workers Union under a single collective bargaining

agreement. Late in 1998 Universal began to negotiate with

Panasonic Disc Services Corporation about the possibility

of expanding the plant to make digital versatile discs (DVDs)

as well as CDs. Panasonic was interested in the manufacturing

facilities but not Universal’s returns department. In May 1999

Universal and Panasonic formed Matsushita Universal Media

Services LLC (MUMS), a Delaware limited liability

company, which acquired Universal’s CD-manufacturing

assets but not its returns assets. Panasonic contributed the

cash needed to expand the facility into DVD production.

MUMS hired most of the employees who had worked in the

CD-making facility; it recognizee the Union as their

representative and signed a new collective bargaining

agreement containing the same economic terms as before,

but some changes in work rules. Universal notified the Union

that the returns facility (which it retained) would be closed,

and it honored all promises that the collective bargaining

agreement made to laid off employees. Some of the returns-

department staff found work at MUMS, which agreed to give

them a preference in hiring, for it needed extra employees to

expand into DVDs. Some of the returns employees were not

hired under this preference, however. (The record does not

disclose why.) When MUMS refused to give laid off returns-

department workers a right to displace persons who had

less seniority at Universai, they sued MUMS, Universal,

Panasonic, and the Union for breach of the collective

bargaining agreement. (Since this suit began, affiliations have

changed. Panasonic Disc Services has been acquired by

Thompson Multimedia Inc. and renamed Technicolor Disc

Services Corporation. MUMS now is TUMS. The Union,

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Appendix A

which used to be affiliated with the Service Employees

International Union, AFL-CIO, now is Local 2000 of the

SEIU, and the body representing MUMS’ employees is

Chapter 352 of Local 2000. We use the old names for

convenience.)

Plaintiffs are not parties to the collective bargaining

agreement, and the Union does not believe either that

Universal has failed to keep its promises or that MUMS

acquired any of Universal’s obligations under the old

agreement. To bypass the Union and sue in their own right,

the employees first must establish that the Union violated

its duty of fair representation. See Air Line Pilots Ass’n v.

O'Neill, 499 U.S. 65 (1991). The district court found that

the Union had fulfilled all duties and on that account granted

summary judgment for the defendants. 225 F. Supp. 2d 928

(S.D. Ill. 2002). The court added, for good measure, that

(a) neither Panasonic nor MUMS acquired any of Universal’s

obligations, so that MUMS’ failure to give the plaintiffs

transfer or bumping rights could not violate any of plaintiffs’

entitlements under that collective bargaining agreement, and

(b) Universal had not been served with process and thus is

not a party to begin with.

Service should have been the lead item in plaintiffs’

appellate brief, for their rights derive from an agreement

between Universal and the Union, and if Universal is not a

party to the case then their claim has little prospect of success.

Yet plaintiffs’ opening brief ignores the problem. Plaintiffs

do not get around to it until their reply brief, which is too

late. Any contest to this ingredient of the district court’s

resolution has been forfeited. What plaintiffs contend, in an

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Appendix A

effort to sidestep the consequences of their failure to make

Universal a party, is that Panasonic and Universal formed a

joint venture or partnership in the months between the outset

of negotiations and the formation of MUMS. Suppose that

this is so — though we very much doubt it, for negotiations

differ from agreements. See Lerro v. Quaker Oats Co.,

84 F.3d 239 (7th Cir. 1996). Neither Panasonic nor Universal

purported to act in MUMS’ name before its technical

formation. It was MUMS and Universal, not “the joint

venture,” that agreed that Universal would retain the returns

department. And it was MUMS, not “the joint venture,”

that declined to hire the plaintiffs or give them seniority over

other workers. Once MUMS came into being, Universal

became its investor. Plaintiffs do not contend that MUMS,

Panasonic, and Universal have failed to observe the

formalities of corporate (or LLC) life, so MUMS cannot be

held liable on a contract to which only Universal is a party,

any more than Universal may be held liable on a contract to

which only MUMS and the Union are parties. See 6 Del.Code

§ 18-303; Abbott Laboratories v. CVS Pharmacy, Inc.,

290 F.3d 854, 858 (7th Cir. 2002); Secon Service System,

Inc. v. St. Joseph Bank & Trust Co., 855 F.2d 406, 416-17

(7th Cir. 1988). Compare NLRB v. International Measurement

& Control Co., 978 F.2d 334, 339-41 (7th Cir. 1992), with

Esmark, Inc. v. NLRB, 887 F.2d 739, 749-52 (7th Cir. 1989).

See also Fall River Dyeing & Finishing Corp. v. NLRB, 482

U.S. 27, 41-43 (1987) (successor employer not bound by

predecessor’s collective bargaining agreement unless this is

an essential remedy for unfair labor practices such as refusing

to hire union adherents on equal terms); NLRB v. Burns

International Security Services, Inc., 406 U.S. 272, 285-87

(1972) (same). MUMS hired union adherents who applied

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Appendix A

and immediately recognized and bargained with the Union;

it is therefore bound by the new terms, not its predecessor’s.

Contrast U.S. Marine Corp. v. NLRB, 944 F.2d 1305

(7th Cir. 1991) (en banc). There is thus no way in which the

Union, Panasonic, and MUMS, the only defendants that

became parties to the case, could be held liable for any wrongs

committed by Universal. (After all, the Union did not agree

to employ or pay the plaintiffs; any obligation along those

lines rests on Universal itself.) Even if Universal should

have paid MUMS to assume the old collective bargaining

agreement or hire the returns-department employees, the

fact remains that it did not — and, asa non-party, cannot be

ordered to do so now. This makes it unnecessary to determine

whether the Union may have violated its duty of fair

representation.

Plaintiffs seem to think that technical rules of law just

do not matter, because (in plaintiffs’ view) MUMS hood-

winked the State of Illinois. According to plaintiffs, MUMS

got a tax break for augmenting the number of local jobs

but concealed from Illinois the fact that the net increase

(new DVD workers Jess laid-off returns workers) would be

small. It is hard to give the flavor of this argument without

using plaintiffs’ words, so we quote the lead paragraph in

their brief:

The District Court erred when it concluded there is no

evidence that MUMS creation was improper motive or by

any unlawful purpose. District Court erred in acknowledging

the fact that EDGE [the state’s Economic Development for a

Growing Economy program], a campaign promise of former

Illinois Governor George Ryan worked, but did not consider

the evidence of improper economic motive or the unlawful

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Appendix A

purpose of Universal and Panasonic in receiving tax benefits

by replacing 184 returns employees who were qualified,

with replacement workers, which MUMS claimed as “new

employees” under 35 ILCS 10/5-5 for tax benefits under

EDGE application Illinois Compiled Statutes, Chapter 35,

Revenue, Income Taxes, Act 10 Economic Development for

a Growing Economy Tax Credit Act submitted by MUMS.

The Court erred in failing to consider the timing of Senate

Bill 40, to consider the effect of former Illinois Governor

Ryan’s campaign promise to help fund the MUMS’s project

with state funds prior to MUMS formation and to consider

the unique 60% Panasonic 40% Universal composition of

MUMS under provision of EDGE.

The brief contains more in the same vein, but plaintiffs

never explain how “the timing of Senate Bill 40” and the like

have any bearing on their legal entitlements — or why,

indeed, they are entitled to litigate MUMS’ tax liability.

See Allen v. Wright, 468 U.S. 737 (1984). How much MUMS

pays in state taxes (or receives in subsidies) is between MUMS

and the State of Illinois. The meaning and effect of collective

bargaining agreements are matters of federal law. See Textile

Workers v. Lincoln Mills, 353 U.S. 448 (1957). Nothing a

state legislature does with respect to taxes or subsidies enlarges

or diminishes any rights under a collective bargaining

agreement. The district court properly dismissed this case.

AFFIRMED.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

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APPENDIX B — MEMORANDUM AND ORDER AND

JUDGMENT OF THE UNITED STATES DISTRICT

COURT FOR THE SOUTHERN DISTRICT OF

ILLINOIS DATED AND FILED SEPTEMBER 24, 2002

UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ILLINOIS

Case No. 99-cv-4276-JPG

ALISON LEBER, ANDREA WOODSIDE, AUDREY

YOUNG, ANGELINE SHERMAN, BARBARA GREEN,

BENJAMIN LAUR, BETTY VANCIL, BEVERLY YOST,

BONNIE HAMPSEY, CHARLES COBIN, JR, CHARLOTTE

WOODSIDE, CONNIE RAMSEY, DARLA HUNTER,

DAVID M GOEKE, DAVID PIPER, DIANE WINGO, DON

MALINSKI, DONNA MOORE, DORIS SMITH, DORTHA

FROST, DOROTHY GODDARD, ELDRED RUSH, EMMA

SCHUBERT, FLORENCE SAYLORS, GENEVA WARD,

GERALD GRAVES, GINA COCKRUM, GLORIA CONROY,

HELEN SMITH, JAMES ALLWANDT, JOHN GODDARD,

JOHN WOODCOCK, KAREN BROWN, KAREN JEAN

CRAIG, KAREN LYNN CRAIG, KATHY CONWAY,

KATHY MILLER, LARRY KEMPFER, LENITA PETERS,

LESLIE MCBRIDE, LILLIAN MATHIS, LINDA ELDER,

LINDA S HOLLOWAY, LORA GROGAN, LORA

KELLERMAN, LOYCE JONES, MARCIA PAYNE, MAX

MCKENZIE, MICHAEL L CRAIN, NATALIE BRAND,

PAMELA FOLDEN, PATRICIA MASON, PATRICIA

HARRIS, PATRICIA MOORE, PAUL WISELY, REGINALD

HARGAN, RICHARD FREDERKING, ROBIN NICKENS,

RODNEY LEE, ROGER KILLINGSWORTH, RONALD

NEHRKORN, SARAH FAYE JONES, SHAWNA GUNTER,

SHEREE REID, SHERRIE KEMPFER, SHERRY CURRY,

pI

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Appendix B

SHIRLEY LEMING, TERRI TILLEY, THELMA BENDER,

VICKI CANNON, VIRGINIA KAPRAUN, VIRGINIA

MOSS, WAINOMIA BIRD, WILLIAM HIGGERSON,

WILLIAM E WELLS and INTERNATIONAL LEATHER

GOODS, PLASTIC, SERVICE & NOVELTY WORKERS

UNION, LOCAL 352,

Plaintiffs,

V.

UNIVERSAL MUSIC AND VIDEO DISTRIBUTION,

INC., PANASONIC DISC SERVICES CORPORATION,

MATSUSHITA UNIVERSAL MEDIA SERVICES LLC OF

AMERICA, INTERNATIONAL LEATHER GOODS,

PLASTICS, NOVELTY & SERVICE WORKERS UNION

and MIDWEST JOINT BOARD OF INTERNATIONAL

LEATHER GOODS, PLASTICS, NOVELTY & SERVICE

WORKERS UNION,

Defendants.

MEMORANDUM AND ORDER

This matter comes before the Court on the motions for

summary judgment filed by defendants Matsushita Universal

Media Services (“MUMS”) (Doc. 62), Panasonic Disc

Services Corporation (“Panasonic”) (Doc. 70), and the

International Leather Goods, Plastics, Novelty and Service

Workers Union (“the International”’) (Doc. 82). The plaintiffs,

International Leather Goods, Plastics, Novelty and Service

Workers Union, Local 352 (“Local 352”), a member

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Appendix B

organization of the International, and 75 of Local 352’s

individual members or former members (“individual

plaintiffs”), have responded to the motions (Docs. 65 & 66),

and the defendants have filed their respective replies

(Docs. 67, 73 & 76). The Court also considers the plaintiffs’

response (Doc. 113) to the Court’s order to show cause why

their claims against Universal Music & Video Distribution,

Inc. (“Universal”) should not be dismissed pursuant to

Federal Rule of Civil Procedure 4(m) for failure to effect

service within 120 days after the filing of the complaint.

The plaintiffs bring this suit against Universal, MUMS

and Panasonic pursuant to § 301 of the Labor Management

Relations Act, 29 U.S.C. § 185, for breach of a collective

bargaining agreement. They have sued the International

pursuant to § 9(a) of the National Labor Relations Act,

29 U.S.C. § 159(a), for breach of the duty of fair represen-

tation based on a violation of § 101(a)(1) of the Labor

Management Reporting and Disclosure Act, 29 U.S.C.

§ 411(a)(1).

I. Summary Judgment Standard

Summary judgment is appropriate where “the pleadings,

depositions, answers to interrogatories, and admissions on

file, together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving

party is entitled to judgment as a matter of law.” Fed. R. Civ.

P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322

(1986); Spath v. Hayes Wheels Int’l-Ind., Inc., 211 F.3d 392,

396 (7th Cir. 2000). The reviewing court must construe the

evidence in the light most favorable to the nonmoving party

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Appendix B

and draw all reasonable inferences in favor of that party.

See Anderson y. Liberty Lobby, Inc., 477 U.S. 242, 255

(1986); Spath, 211 F.3d at 396. Where the moving party

fails to meet its strict burden of proof, a court cannot enter

summary judgment for the moving party even if the opposing

party fails to present relevant evidence in response to the

motion. Cooper v. Lane, 969 F.2d 368, 371 (7th Cir. 1992).

In responding to a summary judgment motion, the

nonmoving party may not simply rest upon the allegations

contained in the pleadings but must present specific facts to

show that a genuine issue of material fact exists. Fed. R.

Civ. P. 56(e); Celotex, 477 U.S. at 322-26; Johnson v. City

of Fort Wayne, 91 F.3d 922, 931 (7th Cir. 1996). A genuine

issue of material fact is not demonstrated by the mere

existence of “some alleged factual dispute between the

parties,” Anderson, 477 U.S. at 247, or by “some meta-

physical doubt as to the material facts,” Matsushita Elec.

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986);

Michas v. Health Cost Controls of Ill., Inc., 209 F.3d 687,

692 (7th Cir. 2000). Rather, a genuine issue of material

fact exists only if “‘a fair-minded jury could return a verdict

for the [nonmoving party] on the evidence presented.”

Anderson, 477 U.S. at 252; accord Michas, 209 F.3d at 692.

II. Facts

Viewed in the light most favorable to the plaintiffs,

the admissible evidence establishes the following facts.’

1. At some points in their statements of fact, the parties refer

to lengthy exhibits without specific page or section citations.

(Cont'd)

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Appendix B

A. The Pinckneyville Plant

Prior io May 1999, Universal owned and operated a

compact disc (“CD”) manufacturing plant in Pinckneyville,

Illinois. The workforce at the plant was composed of

members of Local 352, and the International was their

exclusive bargaining representative. The plant included

manufacturing operations and a department to handle CDs

and digital versatile discs (“DVDs”) returned from customers

(“returns department”). The individual plaintiffs worked

in Universal’s returns department. Their employment was

governed by a1996 collective bargaining agreement between

Universal and the International (“1996 Universal CBA”).

There were no other signatories to the 1996 Universal CBA.

(Cont'd)

The plaintiffs are also guilty of citing to evidence without explaining

it or its relation to the general conclusions for which it is offered in

support, citing to evidence by Bates number without reference to the

exhibit in which it is contained and citing to pages within exhibits

that do not contain those pages. It is not the Court’s function to “scour

the record in search of evidence to defeat a motion for summary

judgment.” Bombard v. Fort Wayne Newspapers, Inc., 92 F.3d 560,

562 (7th Cir. 1996). “Judges are no: like pigs, hunting for truffles

buried in briefs.” United States v. Dunkel, 927 F.2d 955, 956

(7th Cir. 1991). The same proposition holds true with respect to facts

offered in support of or in opposition to a si:mmary judgment motion.

It is also not the Court’s function to construct a party’s argument

for him. Spath v. Hayes Wheels Int’l-Ind.. Inc., 211 F.3d 392, 397

(7th Cir. 2000). Because on occasion the parties have not directed

the Court to specific evidence or explained the Significance of that

evidence, the Court has not considered the inadecustely cited or

explained “facts” in determining whether a genuine issue of material

fact exists for trial.

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Appendix B

By its terms, the 1996 Universal CBA was effective from

June 9, 1996, to June 9, 2001, and possibly longer.

As a result of a corporate reorganization following

Universal’s parent company’s merger with PolyGram,

Universal announced in January 1999 that it would be closing

the Pinckneyville returns department.

B. The Joint Venture

In late 1998, Universal and Panasonic began discussing

the possibility of a joint venture to manufacture CDs and

DVDs. Universal and Panasonic did not share any corporate

parentage and were completely separate corporations.

Panasonic wanted to establish a manufacturing operation

closer to its customers and its warehouses in the eastern and

midwestern United States than its manufacturing operations

in California, which were operating at peak capacity at the

time. Panasonic was also interested in a joint venture with

Universal because it believed that the venture could spawn a

long-term contract to supply DVDs or CDs to Universal, one

of Panasonic’s largest customers, and could give Panasonic

access to lower cost raw materials. On the other side,

Universal wanted to find additional uses for the Pinckneyville

facility, which it believes would become underutilized after

Universal’s parent company’s merger with PolyGram and the

subsequent reorganization.

On April 15, 1999, Universal notified Local 352 and

Rosemary Behrman (“Behrman”), general president of the

International and the International’s Midwest Joint Board and

member of the International’s General Executive Board, that,

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Appendix B

with the exception of the returns department, it would

be selling its Pinckneyville operations. In a meeting held

May 7, 1999, Local 352’s Executive Board was told that the

new owner refused to be bound by the 1996 Universal CBA

but that it would accept the economic terms of the 1996

Universal CBA if some changes were allowed to the non-

economic terms of the agreement. Otherwise, the new owner

would “go non-union.” Behrman did not inform the Local

Executive Board of the specific changes the new owner

wanted because she did not know what they were. The Local

Executive Board authorized Behrman to accept a “language

change” to the non-economic terms of 1996 Universal CBA

in a new agreement with the new employer.

On May 13, 1999, in a letter agreement, Behrman agreed

with Panasonic on behalf of the joint venture company,

MUMS,’ that MUMS would offer jobs to all of the employees

working in Universal’s manufacturing plant under modified

terms and conditions. They also agreed that if a majority

of the MUMS workforce had been represented by the

International when they were employed at Universal,

MUMS would recognize the International as the exclusive

bargaining representative of its workforce as well. In return,

the International agreed to enter into a new collective

bargaining agreement with MUMS under non-economic

terms that differed slightly from the 1996 Universal CBA.

The agreement was clear that the returns department

employ -es would not be offered MUMS employment, would

not become employees of MUMS and would not be able to

2. At this point in the negotiations, MUMS was referred to as

“New Company.”

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Appendix B

bump less senior Universal manufacturing department

employees from their jobs at MUMS.

C. MUMS Goes On Line

The joint venture became a reality on May 22, 1999,

when Universal and Panasonic officially formed MUMS,

a limited liability corporation. The joint venture documents

signed by Universal and Panasonic contained the following

provisions:

3.1 Closing. The transfer of assets contemplated

by this UMVD Contribution Agreement shall

occur simultaneously with, and as part of, the

Closing of the JV Agreement. At Closing, with

respect to the [Universal] Contributed Assets:

* * *

(b) [Universal] and [MUMS] shall enter

into an assignment of the amended Union

Contract. ...

5.4 Employees. [MUMS] shall offer employment

following Closing to each Employee at the

Pinckneyville Facility who is employed in the

CD replication and packaging business of the

Pinckneyville Facility at the Closing on

substantially equivalent salary, wages and benefits

... taken as a whole, as provided to such

PELE CEDAR ANIA ESO ee OE ON RRC

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Appendix B

Employees by [Universal] prior to Closing.

Employees involved in the distribution and returns

business at the Pinckneyville Facility will not be

employed by [MUMS] following Closing, and

[MUMS] will have no liability or obligations with

respect to such employees. .. .

5.5 Union.

5.5.3 [Universal] will bargain in good faith

with the Union concerning the “effects” of

the assignment of the contract to [MUMS].

UMVD Contribution Agreement Among Matsushita

Universal Media Services LLC of America and Universal

Music and Video Distribution, Inc., Dated as of May 22, 1999.

The day after MUMS was formed, MUMS recognized

the International as the exclusive bargaining representative

of its workforce and, on behalf of the International, Behrman

signed a collective bargaining agreement with MUMS

(“1999 MUMS CBA”). She represented that she had the

authority to sign the agreement on behalf of the International

and purported to sign the agreement under the powers granted

by the International’s constitution, which states, in pertinent

part, “The General Executive Board, shall also have the

power, in cooperation with the Local Union, Joint Board or

Council . . . to make contracts with employers.” Constitution

of the International Leather Goods, Plastics, Novelty and

Service Workers Union art. VII, § 5. No provision of the

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Appendix B

International’s constitution required ratification by the

membership, but Local 352’s constitution provided, “Proposed

contracts shall be negotiated by a committee elected by the

members of the shop affected and must be approved by a

majority of the members of the shop attending a meeting

and by the Executive Board of the Union.” Constitution

and By-Laws of International Plastic and Novelty Workers

Union Local 352, AFL-CIO art. 12, § 2. By its terms,

the 1999 MUMS CBA was effective from May 23, 1999,

to June 9, 2001, and possibly longer. Neither Universal nor

Panasonic was a party to the 1999 MUMS CBA.

As a part of the joint venture, Panasonic contributed $18

million in capital expenditures to enable DVD production

and received a 60% ownership interest in MUMS. It was

therefore able to appoint a controlling majority of MUMS

governing board. Universal, on the other hand, contributed

assets and expenditures, including the Pinckneyville facility,

valued at $12 million and received the remaining 40%

ownership interest. As a minority shareholder, Universal

did not control the operations at MUMS’ manufacturing

facility, although Gary Vaughn, Universal’s senior director

of operations at the Pinckneyville plant, and Michele

Rheinecker, Universal’s human resources manager at the

Pinckneyville plant, were hired by MUMS in essentially the

same capacities at the plant. Neither they nor any other

MUMS officer reported to Universal. MUMS and Universal

maintained separate business records, bank accounts,

financial statements, sales forces, advertising and insurance.

‘Universal paid its own bills and taxes in connection with the

returns department.

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Appendix B

MUMS acquired all of Universal’s Pinckneyville

buildings, including the building housing the returns

department, but Universal retained ownership and control

over the returns department operations. MUMS did not have

and did not need a returns department. As promised in the

May 13, 1999, letter agreement, MUMS offered employment

to Universal’s manufacturing operations employees under the

1999 MUMS CBA. However, shortly after it began operating,

MUMS needed additional workers for DVD manufacturing

jobs and accepted applications for those jobs from Universal

returns department employees. MUMS ultimately hired some

of those workers, including some of the individual plaintiffs,

under the terms of the 1999 MUMS CBA. The individual

plaintiffs who were not hired by MUMS continued to work

in Universal’s returns department under the terms of the 1996

Universal CBA. MUMS and Universal never employed the

same workers at the same time.

Universal’s returns department employees were

supervised by one or two Universal site managers. However,

MUMS performed human resources and other administrative

functions for Universal’s returns department employees

pursuant to a contract with Universal. Thus, the time clock

for returns department employees was kept in the MUMS

facility, as were other payroll and human resources records.

MUMS employees sent out Universal paychecks using

MUMS envelopes, monitored and administered discipline

for returns department absenteeism and implemented the

garnishment of returns department employee wages as

appropriate. Other than keeping human resource records and

other administrative functions, MUMS had no authority

or control over the terms of employment of the Universal

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Appendix B

employees in the returns department. In connection to one

Universal employee’s grievance, a settlement document

prepared by a Universal attorney purported to settle with

MUMS and Universal and contained only one signature line.

The Universal attorney did not have authority to settle claims

involving MUMS.

Despite the mostly separate management of the

companies, there was some slight overlap. One Universal

employee unloaded trucks and drove a forklift at the MUMS

facility three times. On at least one occasion, MUMS

employees ran a machine in the returns department building.

MUMS also assisted the returns department in some shipping

functions such as creating invoices and shipping paperwork,

brought over Universal deliveries that had been mistakenly

delivered to MUMS, and delivered shipments from MUMS

to Universal at the returns department. MUMS and the returns

department also shipped boxes, supplies and merchandise to

each other without the standard shipping paperwork.

Using MUMS employees, MUMS maintained the

building in which the returns department was housed as well

as the equipment and property in the returns department,

including the computers and machinery that it had purchased

from Universal. MUMS charged Universal for maintaining

the returns department building.

MUMS now manufactures CDs and DVDs. Manufac-

turing DVDs requires different, additional manufacturing

equipment and worker skills than manufacturing CDs.

MUMS sells more than half of the DVDs to Panasonic,

which had not been a Universal customer prior to MUMS’

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Appendix B

formation. MUMS also intends to expand its Pinckneyville

manufacturing facility and currently employs at least as many

manufacturing workers as Universal did in its CD-only

manufacturing operations. As a consequence of new

manufacturing jobs created since MUMS was originally

formed, MUMS received tax incentives from the state of

Illinois’ Economic Development for a Growing Economy

(“EDGE”) program, which had been passed by the Illinois

legislature four days prior to MUMS’ formation. From

May 1999 until the 1999 MUMS CBA’s termination date,

MUMS, its emplovees and the International observed the

1999 MUMS CBA.

D. Internal Union Matters

On another front, the International was encountering

problems with its own internal governance. During the

relevant time periods, the International was affiliated

with the Service Employees International Union AFL-CIO,

CLC (“SEIU”). On July 11, 1999, the SEIU placed the

International’s Midwest Joint Board into trusteeship,

removed all officers of the Midwest Joint Board, including

Behrman, and appointed Bruce Boyens (“Boyens”) as one

of its deputy trustees.* Several weeks later, Boyens instructed

Local 352 and other local unions within the Midwest Joint

Board that he alone was their legal representative.

3. At some point after the 1999 MUMS CBA became effective,

the International became known as SEIU Local 2000, the Midwest

Joint Board became known as SEIU Local 1001, and the Local

became known as Chapter 352 of SEIU Local 2000. For clarity’s

sake, the Court will continue to refer to the organizations by their

names prior to the name change.

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Appendix B

E. Close Of Returns Department

On July 15, 1999, Universal informed Local 352 that

because of the planned closing of the returns department,

the 184 Local 352 members working in the returns

department would be laid off beginning on September 17,

1999. Subsequently, some of the plaintiffs filed grievances

under the 1996 Universal CBA on behalf of Local 352

members regarding MUMS’ opening. Some were filed with

MUMS and others were filed with Universal. When MUMS

received grievances from Universal employees purportedly

under the 1996 Universal CBA, it referred them to Universal.

Pursuing the grievances, the International met with Universal

to discuss the closing and with MUMS to discuss future

employment of its members. The grievants were not included

in the meetings although the 1996 Universal CBA provides

that they will attend Step 3 of the grievance process.

On September 7, 1999, MUMS signed an agreement

(“Side Letter Agreement”) with Boyens on behalf of the

International. In the Side Letter Agreement, MUMS agreed

to give a hiring preference to Universal’s returns department

employees and to allow those employees to keep certain

vacation benefits. In light of the Side Letter Agreement,

the International did not pursue the grievances further.

The returns department employees were, in fact, laid off

in September and October 1999. The individual plaintiffs

are 75 of those laid off.

III. The Litigation

The plaintiffs filed this lawsuit on November 23, 1999,

alleging that MUMS and Panasonic either (1) are the alter

2la

Appendix B

egos of Universal, (2) are a single or joint employer

with Universal or (3) assumed the obligations of the 1996

Universal CBA by virtue of the joint venture agreements,

and are therefore bound by the 1996 Universal CBA.

They claim that MUMS and Panasonic breached the 1996

Universal CBA when they (1) denied laid off returns

department employees the right to claim jobs at MUMS,

(2) laid off returns department employees when other jobs at

MUMS were available, (3) coerced employees into reopening

the 1996 Universal CBA, (4) attempted to ratify the resulting

new terms without a vote by Local 352, (4) failed to follow

the proper grievance procedure regarding the aforementioned

breaches, and (5) violated §§ 12.02, 14.03 16.07 & 17.02 of

the 1996 Universal CBA. They bring these claims pursuant

to § 301 of the Labor Management Relations Act, 29 U.S.C.

§ 185.4

The plaintiffs also sued the International under Section

9(a) of the National Labor Relations Act, 29 U.S.C. § 159(a),

based on an alleged violation of § 101(a)(1) of the Labor

Management Reporting and Disclosure Act, 29 U.S.C.

§ 411(a)(i). They allege that the International breached its

duty of fair representation when it (1) failed to grieve

Panasonic’s refusal to abide by the 1996 Universal CBA,

(2) recommended to the Local Executive Board that Behrman

be allowed to accept a collective bargaining agreement with

MUMS that was the same as the 1996 Universal CBA except

for some changes to non-economic terms without finding

4. One local union member, Bonnie Hampsey, also brought an

age discrimination claim under the Age Discrimination in

Employment Act, 29 U.S.C. §§ 621 et seq., based on her termination.

The Court has dismissed that claim.

22a

Appendix B

out or telling the Local Executive Board what those changes

would be and (3) executed the 1999 MUMS CBA without

disclosing its terms to or seeking ratification from Local 352.

MUMS and Panasonic argue in their motions for

summary judgment that they cannot be held liable for

breaching the 1996 Universal CBA because they were not

parties to that agreement and are not alter egos of or single/

joint employers with Universal. They also argue that, even if

they were bound by the 1996 Universal CBA, there was no

breach and that, even if there was a breach, all disputes over

the breach were settled with the International.

The International argues in its motion for summary

judgment that the plaintiffs’ claim cannot succeed because

they cannot prevail in their breach of contract claims against

MUMS or Panasonic, a prerequisite for prevailing in a hybrid

suit for the breach of the duty of fair representation against

the International. It also argues that its actions were not

arbitrary, discriminatory or in bad faith and that the plaintiffs

suffered no damage from its actions.

The plaintiffs’ response to the motions is a hodge-podge

of factual assertions, legal conclusions and legal rules with

very little analysis or organization. To the extent it

understands them, the Court will attempt to address each of

the plaintiffs’ liability theories in turn.

IV. MUMS’ and Panasonic’s Liability under the 1996

Universal CBA

It is beyond question that neither MUMS nor Panasonic

is a signatory to the 1996 Universal CBA. Therefore, they

23a

Appendix B

are not bound to that agreement by virtue of a signature.

The Court therefore must determine whether MUMS or

Panasonic is bound by the 1996 Universal CBA by virtue of

their being successors to Universal’s business or by virtue

of other legal theories which can bind a non-signatory to a

collective bargaining agreement. For the following reasons,

the Court finds that no reasonable jury could find that MUMS

or Panasonic were bound by the 1996 Universal CBA.

A. Joint Venturers

Neither MUMS nor Panasonic is bound by the 1996

Universal CBA as a partner or joint venturer with Universal.

The plaintiffs claim that MUMS and Panasonic are liable

under the 1996 Universal CBA because MUMS and Panasonic

are joint venturers with Universal and are therefore liable as

partners for Universal’s liabilities relating to the joint venture.

The plaintiffs are wrong. It is true that Universal and

Panasonic called MUMS a joint venture before MUMS was

formed, and indeed in the planning stage Universal and

Panasonic might have been joint venturers. The plaintiffs

ignore, however, the clear fact that after its creation MUMS

became a limited liability company under the Delaware

Limited Liability Company Act, a wholly different animal

than a joint venture or partnership. See generally Del. Code

Ann. tit. 8, § 18-101 et seg. Members of a Delaware limited

liability company are not governed by partnership principles

and are not obligated for the contractual liabilities of the

limited liability company. See Del.Code Ann. tit. 6, § 18-

303 (2002). The plaintiffs have cited no authority, other than

those discussed and rejected below, for the assertion that a

24a

Appendix B

limited liability company such as MUMS is liable for the

contractual obligations of its corporate members or that a

fellow limited liability company member such as Panasonic

is liable for the contractual obligations of another member.

Even if Universal and Panasonic could be considered to

be joint venturers prior to MUMS’ formation, they would

only be liable for each other’s acts within the scope of

the joint venture. Donohoe v. Consolidated Operating

& Production Corp., 982 F.2d 1130, 1139 (7th Cir. 1992)

(Illinois law); Hudson v. A.C. & S. Co., 535 A.2d 1361, 1363_

(Del. Super. Ct. 1987) (Delaware law). Universal’s relations

with its workforce in its own business were beyond the scope

of any joint venture it might have had with Panasonic.

Those relations are memorialized in a collective bargaining

agreement executed in 1996, years before Panasonic came

into the picture. When it did arrive on the scene, Panasonic

played no part in Universal’s continuing relations with the

plaintiffs in this case. At all relevant times in this case, they

were employed by Universal and governed by the 1996

Universal CBA. Universal’s continuing relations with the

plaintiffs were beyond the scope of any joint venture or

partnership with Panasonic.

For these reasons, the Court finds that no reasonable jury

could find MUMS or Panasonic liable under a joint venture

theory for the obligations of Universal under the 1996

Universal CBA.

B. Successor Liability

Neither MUMS nor Panasonic is bound by the 1996

Universal CBA simply because it is a successor to Universal’s

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25a

Appendix B

Pinckneyville manufacturing or returns business. Although

a successor corporation may be bound to bargain with the

union of the workforce of the predecessor corporation,

generally it is not bound by the substantive terms of the

predecessor corporation’s collective bargaining agreement

unless it agreed, either explicitly or implicitly, to assume

those obligations. NLRB v. Burns Int’l Sec. Servs., 406 U.S.

272, 285 (1972); see also Fall River Dyeing & Finishing

Corp. v. NLRB, 482 U.S. 27, 41, 43 (1987) (successor has

obligation to bargain with predecessor’s employees’ union

if there is “substantial continuity” between the businesses

and the successor hires most of its employees from the

predecessor).° This is because, with respect to the obli gation

to bargain, a mere change in ownership or management does

not affect the force of a National Labor Relations Board’s

5. One major exception to this general rule is for arbitration

clauses, which are viewed through the national policy of encouraging

resolution of labor disputes through arbitration. A successor

corporation that has “substantial continuity of identity in the business

enterprise” of the predecessor corporation may be bound by the

predecessor’s agreement to arbitrate. See John Wiley & Sons v.

Livingston, 376 U.S. 543, 551 (1964) (successor bound by arbitration

clause where predecessor disappeared after merging into successor

in state where successor corporation assumed by law obligations of

merged predecessor corporation and where successor hired all of

predecessor’s employees); compare Howard Johnson Co. v. Detroit

Local Joint Executive Board, 417 U.S. 249, 262 (1974) (successor

not bound by arbitration clause where predecessor remained in

existence and successor hired only small portion of its workforce

from predecessor’s workforce). Another exception to the

successorship rule is for corporate acquisitions by mere stock

purchases. See Esmark, Inc. v. NLRB, 887 F.2d 739, 751 (7th Cir.

1989). Neither exception is relevant to this case.

26a

Appendix B

certification of a bargaining unit representative if a majority

of the employees of the successor were employed by the

predecessor. Burns, 406 U.S. at 279. However, with respect

to substantive contract commitments, a successor is free to

set the new terms upon which it will hire a predecessor’s

employees and is not bound by the substantive terms of the

predecessor’s collective bargaining agreement. Jd. at 284,

294.

A potential employer may be willing to take over

a moribund business only if he can make changes

in corporate structure, composition of the labor

force, work location, task assignment, and nature

of supervision. Saddling such an employer with

the terms and conditions of employment contained

in the old collective-bargaining contract may make

these changes impossible and may discourage and

inhibit the transfer of capital. On the other hand,

a union may have made concessions to a small or

failing employer that it would be unwilling to

make to a large or economically successful firm.

Id. at 287-88.

Thus rule of successorship may hold true even if the

successor is wholly owned by the predecessor or if the

successor and predecessor share a common corporate parent.

International Oil, Chemical & Atomic Workers, Local 7-517

v. Uno-Ven Co., 170 F.3d 779, 781 (7th Cir. 1999). This is

true because the federal common law applicable in breach

of labor contract cases respects the principles of corporate

separateness regardless of common ownership. /d. at 781.

27a

Appendix B

Thus, a successor is not bound by the contracts of an affiliated

predecessor

provided that each corporation complies with the

formalities required by corporation law; that the

splitting of the overall enterprise into separate

corporations does not have an improper purpose,

such as to mislead creditors or otherwise avoid

contractual obligations or to defeat taxation or

regulation; that the unlawful act was not authored

by a corporate affiliate, in which event that

affiliate as the unlawful actor would be a proper

defendant; and that the affiliate did not assume

by assignment or otherwise the contractual

obligation that the union is suing to enforce.

Id.

Atomic Workers discusses a hypothetical analogous

to the case at bar: a corporation that sells its assets to a

subsidiary who continues the business operation. /d.

The Court of Appeals noted that the predecessor, parent

corporation would still be bound by its collective bargaining

agreement if it continued to manage labor relations with the

successor’s workforce. Jd. at 782. However, by the same

token, a predecessor who relinquishes control over labor

relations to an affiliated successor will not cause the successor

to be bound by the predecessor’s collective bargaining

agreement unless the aforementioned exceptions apply. Jd.

at 783.

28a

Appendix B

Panasonic is not a successor to Universal in any sense

of the word. It did not acquire its assets, its workforce or its

business. Without having any continuity whatsoever with

Universal’s business, it cannot be deemed a successor and it

cannot have acquired any liability under the 1996 Universal

CBA via successorship.

MUMS, however, is a more complicated question.

The Court will first examine whether MUMS succeeded

to Universal’s returns department business, then whether

MUMS succeeded to Universal’s manufacturing business.

Returns Department Business: MUMS is a successor to

Universal’s returns department business in the sense that it

became the new owner of the building and the equipment

used in that business. The plaintiffs believe that MUMS also

succeeded to Universal’s returns department business

operations such that the Burns successorship rule would

become applicable.° In support of its position, the plaintiffs

point to the Side Letter Agreement in which MUMS agreed

to give hiring preferences to former Universal employees as

an example of how MUMS ran the returns department

business. However, MUMS’ negotiation with the Inter-

_ national — which represented returns department and MUMS

employees — and its subsequent decision to search for new

employees while at the same time trying to quell complaints

from the International about the returns department closure,

whether meritorious or not, in no way demonstrates that

6. If this were so, even under the Burns successorship rule,

MUMS would have been free to repudiate the terms of the 1996

Universal CBA.

29a

Appendix P

MUMS ran or controlled the returns department business

after it purchased the returns department building.

The plaintiffs also point to the administrative personnel

functions, such as monitoring absences and time clocks,

administering wage garnishments, maintaining personnel

files and mailing paychecks, that were performed by MUMS

pursuant to a contract with Universal. Once again, this

evidence does not show that MUMS controlled the returns

department’s business operation, only that it performed its

contractual obligations to Universal. In fact, the evidence

overwhelmingly shows that Universal continued to run the

returns department and to supervise and manage labor

relations with returns department employees without

substantive involvement of MUMS.

There is no evidence that MUMS succeeded to the returns

department business itself. In fact, all the evidence indicates

that there was no continuity of operations between Universal

and MUMS with respect to the returns business. Universal’s

returns business was, and continued to be after MUMS

purchased the facility, concerned with disposing of returned

CDs and DVDs. MUMS, on the other hand, became merely

a landlord. No party can seriously contend that there is any

continuity between disposing of media products and being a

landlord. If this were the case, labor forces would be required

to negotiate with a new “employer” every time a building

housing the workforce changed hands. This would be absurd.

For this reason, the Court finds that MUMS did not succeed

to Universal’s returns department business and was therefore

not obligated to observe the 1996 Universal CBA or to

bargain with the International concerning the returns

department.

30a

Appendix B

Manufacturing Business: MUMS concedes that it is a

successor to Universal’s manufacturing operations because

MUMS purchased Universal’s manufacturing plant assets and

continued with its CD manufacturing business, although

it added the DVD manufacturing operation. Therefore,

under Burns, even if MUMS’ manufacturing operations had

“substantial continuity” with Universal’s manufacturing

operations, which the Court assumes at this point without

deciding, it would only be bound to bargain with the

workforce’s exclusive bargaining representative. It would not

be bound by the terms of the 1996 Universal CBA. MUMS’

status as a successor to Universal’s manufacturing business

is simply not enough by itself to warrant binding it to the

1996 Universal CBA.

The plaintiffs argue that the Burns successorship rule

should not apply and that MUMS should be bound by the

1996 Universal CBA because Universal and MUMS should

not be viewed as separate corporations. Relying on Atomic

Workers, Local 352 argues that Universal controls MUMS’

labor relations, that MUMS was created for the improper

purpose of taking advantage of the Illinois EDGE program

and that MUMS assumed the 1996 Universal CBA.

1. Control of Labor Relations

There is no evidence from which a reasonable jury could

conclude that Universal controlled labor relations at the

Pinckneyville manufacturing plant after MUMS was created.

Affidavit testimony establishes that Universal had no

authority over employment-related matters at MUMS or over

negotiations of the 1999 MUMS CBA.

3la

Appendix B

Again, the plaintiffs point to the Side Letter Agreement

and MUMS’ performance of administrative personnel

functions for Universal, both of which the Court discussed

above. Neither the Side Agreement nor the personnel

assistance demonstrates that Universal managed labor

relations for MUMS at the manufacturing plant. Thus, these

facts provide no basis to find that Universal continued to

manage the Pinckneyville manufacturing plant’s labor

relations after MUMS’ creation.

The plaintiffs also argue that the attempt by a Universal

attorney to settle claims by a Universal returns department

employee against MUMS and Universal using a settlement

agreement with one signature line for the “employer” is proof

positive that the labor relations of MUMS and Universal are

intimately intertwined. The plaintiffs overlook the fact that

the drafting attorney testified that he did not represent MUMS

or have the authority to prepare an agreement settling claims

against MUMS. The Court believes that an unexecuted

settlement agreement that the drafting attorney admits he did

not have authority to prepare is not evidence that Universal

controlled labor relations at the Pinckneyville manufacturing

plant after MUMS’ creation.

Although not raised by the plaintiffs, the Court also notes

that MUMS and Universal maintained separate grievance

procedures. Accordingly, without taking any action, MUMS

referred grievances from Universal employees to Universal

for resolution. In light of the foregoing evidence, the Court

believes that no reasonable jury could find that Universal

controlled labor relations at the Pinckneyville manufacturing

32a

Appendix B

facility after MUMS’ creation or that MUMS, by virtue of

Universal control, was bound by the 1996 Universal CBA.

2. Improper Purpose

The plaintiffs also believe that the structure and timing

of the MUMS transaction to take advantage of tax benefits

under the Illinois EDGE program was fraudulent. This is

absurd. The evidence shows that Universal and Panasonic

had legitimate business reasons for wanting to create MUMS.

They did not seek to avoid dealing with the International by

such a plan, for MUMS immediately signed the 1999 MUMS

CBA after it was created. Furthermore, by its very nature,

the EDGE program’s tax incentives were designed to

influence corporations to create jobs in Illinois. This was a

legitimate consideration for the MUMS project. In fact,

the plaintiffs admit in their brief that the EDGE incentives

worked: “MUMS would not have been formed in Illinois

but for the availability of the Edge [sic] program.” Pl. Mem.

at 45. That Universal and Panasonic created MUMS in Illinois

to avoid a potential shut-down of the Pinckneyville plant,

and in doing so did not attempt to dodge an obligation to

bargain with the International, and that the MUMS formation

was timed so that MUMS could take advantage of EDGE

tax incentives reflects shrewd business judgment, not fraud,

and demonstrates the effectiveness of the EDGE program.

No reasonable jury could find otherwise.

3. Assumption of the 1996 Universal CBA

In support of their argument that MUMS assumed the

1996 Universal CBA, the plaintiffs point to language in the

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33a

Appendix B

joint venture documents evidencing an intent to assign the

1996 Universal CBA as amended. They also argue that

Panasonic’s attorney’s negotiation with Behrman for the

May 13, 1999, letter was, in fact, carrying out Universal’s

promise in the May 22, 1999, joint venture documents

to renegotiate a labor contract with the International.

Panasonic’s assumption of this duty, the plaintiffs argue,

manifests an assumption of the 1996 Universal CBA.

Aside from the obvious timing problems presented by

allegations of fulfilling a promise before it was made, the

Court finds that the joint venture agreements do not manifest

an intent to assign or assume the 1996 Universal CBA.

Although they use the term “assign,” it is clear from the joint

venture documents as a whole that the parties did not mean

to “assign” the 1996 Universal CBA as that term is used as a

legal term of art. First, the mention of the union contract is,

with one exception, modified by the term “amended,” which

indicates that MUMS did not intend to assume the 1996

Universal CBA as it existed at the time. Second, it is clear

from § 5.4 that MUMS intended to make new offers of

employment to workers at the Pinckneyville manufacturing

plant but with some changes to their employment terms. It is

equally clear that MUMS intended to have no contractual

obligation to any Universal returns department employee.

This is hardly language manifesting an intent to assume

contractual obligations to returns department employees.

On the contrary, the evidence can only lead to the conclusion

that, although Universal promised to renegotiate terms with

the International to be implemented at the MUMS

manufacturing facility, that promise was unnecessary because

-on May 22, 1999, Panasonic had already established labor

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34a

Appendix B

relations with the International on behalf of MUMS and

had already negotiated the terms of the 1999 MUMS CBA.

The Court is convinced that no reasonable jury could find

that the joint venture documents, when read as a whole,

manifested an intent to assume or assign the 1996 Universal

CBA.

In sum, a reasonable jury could not find that MUMS

or Panasonic succeeded to Universal’s returns department

operations and that, with respect to Universal’s manu-

facturing operations, the rule of successorship set forth in

Burns applies to MUMS. Therefore neither MUMS nor

Panasonic is bound by the terms of the 1996 Universal CBA

with respect to any of the Pinckneyville operations. The Court

now turns to other theories under which one company can

be liable for the collective bargaining agreements of another.

Although these theories overlap to some degree with the

exceptions to the successorship rule discussed above, they

are significant enough as independent theories to warrant

separate discussion.

C. Alter Ego Theory

Neither MUMS nor Panasonic is bound by the 1996

Universal CBA on the grounds that it is Universal’s alter

ego. Acompany may be liable under the collective bargaining

agreement of another company if the company is its alter

ego. See International Union of Operating Eng'’rs, Local 150

v. Rabine, 161 F.3d 427, 433 (7th Cir. 1998); see also Howard

Johnson Co. v. Detroit Local Joint Executive Board, 417 U.S.

249, 259 n. 5 (1974). To be an alter ego, the second company

must be a “disguised continuance” of the first company that

35a

Appendix B

results in an evasion of the first company’s labor obligations.

Trustees of Pension, Welfare & Vacation Fringe Benefit Funds

of IBEW, Local 701 v. Favia Elec. Co., 995 F.2d 785, 788-89

(7th Cir. 1993); see Howard Johnson, 417 U.S. at 259 n. 5;

Rabine, 161 F.3d at 433. To determine if companies are

alter egos, the Court should consider the following relevant

factors:

(1) substantially identical ownership and/or

control; (2) substantially identical management

including control of labor relations; (3) identical

and unchanged business operations including

purpose, facilities, equipment, customers and

supervision; and (4) unlawful motivation.

NLRB v. Dane County Dairy, 795 F.2d 1313, 1322 (7th Cir.

1986); see Rabine, 161 F.3d at 433. -

The evidence presented clearly shows that neither

MUMS nor Panasonic is Universal’s alter ego.

1. Substantially Identical Ownership and/or Control

MUMS and Panasonic both have substantially different

ownership and control than Universal has. Universal owns

only 40% of MUMS. Panasonic owns the remaining:

60% and, by virtue of its majority ownership, appoints a

controlling majority of MUMS’ governing board. Thus,

Universal did not have control over MUMS.

As for Panasonic, it does not share any corporate parents

with Universal, and there is no evidence that either controls

36a

Appendix B

the other. Therefore, they clearly do not have identical

ownership or control.

2. Substantially Identical Management and Labor

Relations

MUMS’ and Universal’s management and labor relations

are not so interconnected as to support the finding that they

are alter egos. It is true that MUMS’ chief operating officer

Gary Vaughn and human resources manager Michele

Rheinecker used to hold virtually the same positions when

Universal owned the Pinckneyville manufacturing facility.

However, with the exception of contracted human resources

work, neither of those employees managed or supervised

Universal employees or reported to Universal after they began

working for MUMS. In fact, no MUMS officer reported to

Universal. Universal supervisors continued to oversee and

manage Universal employees in the returns department after

MUMS was created, and MUMS and Universal had no

common employees.

With respect to labor relations, as noted in the Court’s

discussion of successor liability, there is no evidence from

which a reasonable jury could determine that Universal

controlled MUMS’ labor relations or vice versa.

As for Panasonic, Universal and Panasonic do not have

substantially identical management or labor relations.

There is no common or cross-management between the

two companies, and each conducts its own labor relations.

As discussed earlier, Panasonic’s negotiation of the 1999

MUMS CBA on behalf of MUMS before MUMS was actually

37a

Appendix B

created does not demonstrate any shared management or labor

relations with Universal. No jury could find that this factor

weighs in favor of alter ego status.

3. Identical Business Operations

Although similar, MUMS’ and Universal’s business

operations at the Pinckneyville manufacturing facility are not

identical. It is true that under both owners, the Pinckneyville

manufacturing facility produced CDs. However, under

MUMS’ ownership, the facility also produces DVDs, which

requires different, additional manufacturing equipment

and worker skills. It sells more than half of the DVDs to

Panasonic, who had not been a Universal customer prior to

MUMS’ formation. In addition, as all parties are acutely

aware, MUMS does not have a returns department like

Universal did. Furthermore, MUMS and Universal maintain

separate business records, bank accounts, financial state-

ments, sales forces, advertising and insurance, and Universal

pays its own bills and taxes in connection with the returns

department.

There is evidence that one Universal employee unloaded

trucks and drove a forklift at MUMS three times, that MUMS

employees ran a machine in the Universal facility at least

one time, that MUMS employees helped prepare Universal

shipping paperwork and that MUMS and Universal delivered

boxes to each other without the standard paperwork. However,

there is nothing to suggest that these occasions were not isolated

or that they rose to the level of actually integrating business

operations such that MUMS was a “disguised continuance”

of Universal.

38a

Appendix B

The plaintiffs do not discuss Panasonic’s business

operations and therefore cannot possibly be contending that

Panasonic and Universal have identical business operations.

4. Unlawful Motivation

There is no evidence that MUMS’ creation was motivated

by any unlawful purpose. Both Panasonic and Universal have

set forth legitimate business reasons for entering into the joint

venture. As discussed above, taking advantage of the Illinois

EDGE program when MUMS was formed was certainly

a legitimate business objective. Furthermore, the fact that

MUMS, through Panasonic, had agreed to enter into a

collective bargaining agreement similar to the 1996 Universal

CBA even before it was technically formed, and indeed did

so the day after it was formed, belies any suggestion that

MUMS was attempting to avoid its obligations under labor

law. The plaintiffs have not alleged any other improper

motivation for MUMS’ formation, and the Court cannot think

of any on its own.

In light of the foregoing, the Court finds that the evidence

leaning against finding that MUMS was Universal’s alter ego

so outweighs the slight evidence that MUMS was a

“disguised continuance” of Universal that no reasonable jury

could find that MUMS is Universal’s alter ego. As for

Panasonic, there is no evidence at all that it was Universal’s

alter ego. For this reason, neither MUMS nor Panasonic

was bound by the 1996 Universal CBA as an alter-ego of

Universal.

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39a

Appendix B

D. Single Employer

Neither MUMS nor Panasonic is bound by the 1996

Universal CBA under the theory that it is a single employer

with Universal. Where two companies are nominally separate

business enterprises but where in reality they comprise an

integrated enterprise, one may be held liable for the labor

obligations of the other. See Trustees of Pension, Welfare &

Vacation Fringe Benefit Funds of IBEW, Local 701] v. Favia

Elec. Co., 995 F.2d 785, 788 (7th Cir. 1993). The relevant

factors to consider in the single employer inquiry are similar

to those in the alter ego inquiry: interrelation of operations,

management, labor relations and ownership. Jd.; Esmark, Inc.

v. NLRB, 887 F.2d 739, 753 (7th Cir. 1989) (citing Radio

Broadcast Technicians Local 1264 v. Broadcast Serv. of

Mobile, Inc., 380 U.S. 255, 256 (1965)). The Court has

already discussed the relevant factors in its alter ego analysis

and has found that, although there is evidence of minimal

interrelation of MUMS’ and Universal’s operations, in

combination the factors do not weigh in favor of finding that

MUMS and Universal are intimately interrelated. Therefore,

the Court is convinced that no reasonable jury could find

MUMS or Panasonic is a single employer with Universal.

©. Joint Employer

Neither MUMS nor Panasonic is bound by the 1996

Universal CBA by virtue of its being a joint employer with

Universal. Corporations are joint employers if they exert

significant control over the same employees. Teamsters Local

Unions Nos. 75 & 200 v. Barry Trucking, Inc., 176 F.3d 1004,

1008 (7th Cir. 1999); DiMucci Constr. Co. v. NLRB, 24 F.3d

40a

Appendix B

949, 952 (7th Cir. 1994); NLRB v. Western Temp. Servs.,

Inc., 821 F.2d 1258, 1266 (7th Cir. 1987).’ The relevant

factors to be considered in the joint employer inquiry

are “(1) supervision of employees’ day-to-day activities;

(2) authority to hire or fire employees; (3) promulgation

of work rules and conditions of employment; (4) issuance

of work assignments; and (5) issuance of operating

instructions.” DiMucci, 24 F.3d at 952; accord Barry Trucking,

176 F.3d at 1008. Joint employer status questions often arise

in construction cases where a construction site owner or

general contractor has the authority to dictate certain terms

of its subcontractors’ employees’ employment. See generally

DiMucci Constr. Co., 24 F.3d at 952-54.

The evidence before the Court demonstrates that

Universal did not supervise MUMS or Panasonic employees,

set their work rules or conditions of employment, issue their

work assignments or issue operating instructions and that

Universal did not have the authority to hire or fire MUMS or

Panasonic employees. Likewise, neither MUMS nor

Panasonic did any of these things for Universal employees.

In the absence of any evidence of cross-supervision, the

evidence that on occasion a MUMS employee performed

work in the Universal returns department or that a Universal

employee performed work at the MUMS manufacturing

facility is not sufficient to show that one exerted significant

7. Some courts have merged the single employer and joint

employers theories. See, e.g., Sheetmetal Workers Union Local

No. 110 v. Public Service Co., 771 F.2d 1071, 1074 (7th Cir. 1985).

DiMucci and Western Temporary Services acknowledge this

confusion and clearly distinguish the theories. DiMucci Constr. Co.,

24 F.3d at 953; Western Temp. Servs., 821 F.2d at 1266.

4la

Appendix B

control over the other’s employees. In sum, there is no basis

whatsoever for a reasonable jury to find that Universal and

MUMS or Panasonic were joint employers.

F. Conclusion

For the foregoing reasons, the Court finds that no

reasonable jury could find that MUMS or Panasonic was

bound by the 1996 Universal CBA and that therefore MUMS

and Panasonic are entitled to judgment as a matter of law.

Accordingly, the Court need not reach the additional issues

presented in the motions for summary judgment and will

grant MUMS’ and Panasonic’s motions for summary

judgment (Docs. 62 & 70).

V. The International’s Duty of Fair Representation

To recap, the plaintiffs claim that the International has

breached its duty of fair representation by (1) failing to grieve

Panasonic’s refusal to abide by the 1996 Universal CBA,

(2) recommending to the Local Executive Board that Behrman

be allowed to accept a collective bargaining agreement with

MUMS that was the same as the 1996 Universal CBA except

for some changes to non-economic terms without finding

out or telling the Local Executive Board what those changes

would be and (3) executing the 1999 MUMS CBA without

disclosing its terms to or seeking ratification from Local 352.

The International argues that the plaintiffs cannot succeed

on their claims brought under § 301 of the Labor Management

Relations Act because they cannot prevail in their claims

against MUMS or Panasonic, a prerequisite for prevailing in

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Appendix B

a suit for the breach of the duty of fair representation against

the International. It also argues that its actions were not

arbitrary, discriminatory or in bad faith considering the

circumstances in which it found itself and that the plaintiffs

suffered no damage from its actions.

An employee may bring a claim for breach of the duty

of fair representation for a union’s conduct in pursuing

a grievance or for negotiating a collective bargaining

agreement. See, e.g., Vaca v. Sipes, 386 U.S. 171 (1967)

(grievance); Filippo v. Northern Ind. Pub. Serv. Corp., 141

F.3d 744 (7th Cir. 1998) (grievance); Ford Motor Co. v.

Huffman, 345 U.S. 330 (1953) (contract negotiations);

Wegscheid v. Local Union 2911, United Auto. Workers,

117 F.3d 986 (7th Cir. 1997) (contract negotiations). A union

violates its duty of fair representation when its conduct was

arbitrary, discriminatory or in bad faith. Air Line Pilots Ass'n,

Int’l v. O'Neill, 499 U.S. 65, 67 (1991); Vaca v. Sipes,

386 U.S. 171, 190 (1967); Filippo, 141 F.3d at 748.

The arbitrariness inquiry is objective. If there is any

rational reason for the union’s conduct, it cannot be found to

be arbitrary. Filippo, 141 F.3d at 748 (citing O'Neill, 499

U.S. at 67). In the collective bargaining context, “[a] wide

range of reasonableness must be allowed a statutory

bargaining representative in serving the unit it represents,

subject always to complete good faith and honesty of purpose

in the exercise of its discretion.” Ford Motor Co. v. Huffman,

345 U.S. 330, 337-38 (1953). These principles hold true

even if the end result of the union’s conduct is ultimately

unfavorable to an individual employee or the union as a whole

or favors a majority over a minority of the bargaining

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Appendix B

unit members. O'Neill, 499 U.S. at 79; see generally Trnka

y. Local Union No. 688, United Auto. Workers, 30 F.3d 60

(7th Cir. 1994); Dwyer v. Climatrol Indus., Inc., 544 F.2d

307 (7th Cir. 1976). The union’s decisions must be judged

based on the circumstances when it made its decisions,

not in hindsight. O'Neill, 499 U.S. at 67.

On the other hand, the bad faith determination requires

inquiry into the subjective motivation behind a union’s

conduct. Jd. at 74-75.

The Court will now address in turn each of the union’s

alleged breaches of the duty of fair representation.

A. Failure to Grieve Panasonic's Refusal to Abide by

the 1996 Universal CBA

The plaintiffs assert that the International should have

grieved Panasonic’s refusal (1) to recognize and abide by

the 1996 Universal CBA, (2) to negotiate with the union to

modify the 1996 Universal CBA and (3) to disclose the new

terms and conditions it would demand in a new collective

bargaining agreement. They also assert that the International

should have grieved Panasonic’s demand for “language

changes” to the 1996 Universal CBA and threat to “go non-

union.” The Court assumes that the plaintiffs’ complaints

include the International’s decision not to pursue some

plaintiffs’ grievances to arbitration, although those issues

were not pled in the complaint. ;

To the extent that the plaintiffs have pled § 301 claims

against the International in a hybrid suit for Panasonic’s

breach of the 1996 Universal CBA, the Court can dispose of

44a

Appendix B

them in short order. Those claims against the International

are not viable because the plaintiffs’ claims against MUMS

and Panasonic have failed (See Part IV of this order), and

the plaintiffs have not pursued any claims against Universal

(see Part VI of this order). In suits for breach of a collective

bargaining agreement that include claims that a union violated

its duty of fair representation, an “employee’s claim against

the union and his claim against the employer are interlocked:

neither claim is viable if the other fails.” Crider v. Spectrulite

Consortium, Inc., 130 F.3d 1238, 1241 (7th Cir. 1997).

To the extent that the plaintiffs claim that they were harmed

because the International did not grieve or pursue to

arbitration Panasonic’s alleged failure to abide by the 1996

Universal CBA, those claims must fail because the plaintiffs

claims for breach of that collective bargaining agreement

have failed. :

Even if the plaintiffs had prevailed against Panasonic

for breach of contract, they have not presented evidence from

which a reasonable jury could find that the International’s

treatment of grievances was arbitrary, discriminatory or in

bad faith. The International has presented a rational reason

for its course of conduct. It was faced with a new employer

that was willing to accept the International as the exclusive

bargaining representative of its workforce if a majority of

the workforce had come from Universal. It was also willing

accept a new collective bargaining agreement that included

the central economic terms of the 1996 Universal CBA but

which made some changes to non-economic provisions.

If the International had rejected Panasonic’s proposal and

grieved its refusal to abide by the 1996 Universal CBA, the

International could have faced a very unpleasant situation.

45a

Appendix B

First, MUMS could have sought its workforce from people

that had not worked for Universal immediately before, thus

leaving much of the bargaining unit potentially unemployed.

MUMS could have contested the International’s right to

represent its workforce, thus leading to a dispute over the

source of MUMS’ employees and whether MUMS had

substantial continuity with Universal’s manufacturing

business and was thus obligated to bargain with the Inter-

national. If MUMS was found not to have substantial

continuity with Universal’s manufacturing business, the

workforce faced the prospect of holding an election. Finally,

as noted in NLRB v. Burns Int’l Sec. Servs., 406 U.S. 272,

285 (1972), MUMS could have imposed whatever draconian

employment terms and conditions it wanted until the

workforce became represented by a union and negotiated a

collective bargaining agreement. The International then faced

the possibility that it would have to strike during the contract

negotiations to get the provisions it wanted. The Inter-

national’s decision to avoid these potential problems was

rational. Furthermore, the plaintiffs have not presented any

evidence that the International’s refusal to grieve MUMS’

failure to abide by the 1996 Universal CBA was discriminatory

or in bad faith. The fact that its rational choice harmed some

employees in the bargaining unit— the returns department

employees — while safeguarding employment for a majority

of the unit does not render it arbitrary, discriminatory or in

bad faith.

In sum, the plaintiffs have pointed to no other evidence

that the International was arbitrary, discriminatory or acted

in bad faith by not grieving Panasonic’s refusal to abide by

the 1996 Universal CBA.

46a

Appendix B

B. Recommendation to Accept 1996 Universal CBA

Terms with Changes

To the extent that the plaintiffs have pled claims for

breach of the duty of fair representation independent of any

breach of contract, those claims must also fail. The plaintiffs

assert that the International breached its duty of fair

representation when, on May 7, 1999, Behrman recommended

that the Local Executive Board authorize her to accept the

different non-economic terms that Panasonic wanted to

include in a new collective bargaining agreement without

finding out what those different terms would be. The plaintiffs

also claim that Behrman misled, deceived and withheld

material information from the Board when she sought its

authority to enter into the 1999 MUMS CBA.

Once again, for the reasons set forth in Part V.A. of this

order, the Court finds that the International’s conduct, through

Behrman, was not arbitrary, discriminatory or in bad faith.

At the time Behrman sought approval from the Local

Executive Board to enter into the 1999 MUMS CBA,

Panasonic had assured her that the economic terms of the

1999 MUMS CBA would be the same as the 1996 Universal

CBA. The plaintiffs have not pointed to any evidence that

Behrman knew of the proposed new terms on May 7 or

pointed out anything that Behrman could have done to force

Panasonic to reveal what the non-economic changes were to

be. The plaintiffs imply that had she “demanded” to know

the changes, Panasonic would have told her. However, it is

hardly likely that hardball labor lawyers would have caved

in to Behrman’s “demand” for more information at that time.

Panasonic wanted an answer from the International, and

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Appendix B

Behrman did her best to get it one and to avoid the numerous

potential problems listed in Part V.A. of this order. In light

of what she did know at the time, Behrman was straight-

forward with the Local Executive Board, and, in retrospect,

MUMS agreed to essentially what Panasonic said it would

agree to in the May 13 letter agreement. The plaintiffs have

presented no evidence that Behrman misled, deceived or

withheld information from the Local Executive Board.

In sum, there is no evidence from which a reasonable jury

could find that her conduct was arbitrary, discriminatory or

in bad faith.

C. Execution of 1999 MUMS CBA

The plaintiffs assert that the International breached its

duty of fair representation when Behrman executed the 1999

MUMS CBA without disclosing the terms to Local 352

and seeking its ratification of the agreement in violation of

Local 352’s bylaws. The International argues that its

constitution allows it to bargain with employers without input

from local unions and entered into collective bargaining

agreements without ratification by local unions. In fact,

the International’s constitution states, in pertinent part,

“The General Executive Board, shall also have the power,

in cooperation with the Local Union, Joint Board or Council

to make contracts with employers.” Constitution of the

International Leather Goods, Plastics, Novelty and Service

Workers Union art. VII, § 5.

When it comes to collective bargaining negotiations,

it is important to remember that bargaining authority

necessarily is ‘a delegation to the negotiators of a discretion

48a

Appendix B

to make such concessions and accept such advantages as,

in the light of all relevant considerations, they believe will

best serve the interests of the parties represented.” Ford

Motor Co. v. Huffman, 345 U.S. 330, 337-38 (1953).

In this case, the International’s conduct was not arbitrary, —

discriminatory or in bad faith. It was surely well aware that

under Burns MUMS could impose any terms it wished on its

employees when it opened shop for the first time. Its decision

to ensure that the economic benefits remained for the

employees who would be working at MUMS was rational.

The decision also comported with the International’s

constitution, although it may not have complied with

Local 352’s by-laws. However, a violation relating to

ratification of collective bargaining agreements do not by

itself constitute a breach of the duty of fair representation.

See, e.g., Brown v. IBEW, Local Union No. 58, 936 F.2d 251,

255 (6th Cir. 1991). The plaintiffs have presented no evidence

showing that any ratification deficiency in this case amounts

to arbitrary conduct.

The Court is also mindful that it was a perfectly rational

decision for the International not to seek ratification from

those who did not work for MUMS when the 1999 MUMS

CBA was signed, such as the plaintiffs in this case. They

could have no interest in a contract with an employer for

whom they did not work. The only people who arguably

would have the right to ratify the 1999 MUMS CBA are the

ones who worked for MUMS when it opened. None of those

people is a party to this suit. For this reason, the International

could not have breached any duty to the plaintiffs to allow

them to ratify the 1999 MUMS CBA.

49a

Appendix B

Finally, the plaintiffs have not presented any evidence

that the International’s failure to seek ratification of the 1999

MUMS CBA by the Local 352’s entire membership was

discriminatory or in bad faith.

For the foregoing reasons, the Court finds that the

plaintiffs have presented no evidence from which a

reasonable jury could find that the International breached its

duty of fair representation toward the plaintiffs. Accordingly,

the Court will grant the International’s motion for summary

judgment (Doc. 82).

VI. Failure to Serve Universal

On August 5, 2002, the Court ordered the plaintiffs to

show cause why their claims against Universal should not

be dismissed without prejudice pursuant to Federal Rule of

Civil Procedure 4(m) for failure to timely effect service in

the more than two and a half years since the case was filed

on November 23, 1999. The plaintiffs responded (Doc. 113),

not arguing that they had good cause for failure to serve

Universal but instead arguing that they had served Universal.

In their response, they first argue that the Court was

wrong to quash service on August 15, 2000, on another entity

with “Universal” in its name. This argument comes about

two years too late. The plaintiffs have waived this argument

by not asking for reconsideration of the Court’s order in a

timely fashion.

The plaintiffs then argue that service on Panasonic

suffices as service on Universal since they were partners in

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Appendix B

the formation of MUMS and alter egos. As noted earlier in

this order, the plaintiffs have not submitted any evidence from

which a reasonable jury could find that Panasonic and

Universal were alter egos, and the plaintiffs’ complaints in

this action are outside the scope of any joint venture it might

have had with Panasonic. Furthermore, the plaintiffs have

not filed any return of service on Panasonic or attached any

return of service to its submissions showing that the summons

was directed to a joint venture or partnership as opposed

to simply being directed to Panasonic as a corporation.

After three years of pursuing this litigation against Panasonic

and MUMS but not seeking discovery from Universal or

including it in any other way in the progression of this case,

the plaintiffs cannot attempt to save their claims against

Universal by claiming at the eleventh hour that service was

accomplished when it was made upon Panasonic.

Besides the foregoing unsuccessful arguments that they

have actually served Universal, the plaintiffs have not even

attempted to show good cause for their failure to serve

Universal. Thus, Rule 4(m) does not require the Court to

extend time for service of process. It does, however, allow

the Court in its discretion to make such an extension.

However, in light of the two-year delinquency in service on

Universal and the fact that all other claims in this case have

been resolved, such an extension is not warranted and will

only serve to reward the plaintiffs’ delinquency. Therefore,

the Court will dismiss without prejudice the plaintiffs’ claims

against Universal pursuant to Rule 4(m).

S5la

Appendix B

VII. Conclusion

For the foregoing reasons, the Court hereby:

© GRANTS MUMS’, Panasonic’s and the International’s

motions for summary judgment (Docs. 62, 70 & 82);

* DISMISSES without prejudice the plaintiffs’ claims

against Universal pursuant to Rule 4(m);

* DENIES as moot the plaintiffs’ motion to continue

subpoenas (Doc. 112); and

* DIRECTS the Clerk of Court to enter judgment

accordingly.

IT IS SO ORDERED.

DATED: September 24, 2002

s/ J. Phil Gilbert

J. PHIL GILBERT

DISTRICT JUDGE

oe

52a

Appendix B

UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ILLINOIS

Case No. 99-cv-4276-JPG

ALISON LEBER, ANDREA WOODSIDE, AUDREY

YOUNG, ANGELINE SHERMAN, BARBARA GREEN,

BENJAMIN LAUR, BETTY VANCIL, BEVERLY YOST,

BONNIE HAMPSEY, CHARLES COBIN, JR, CHARLOTTE

WOODSIDE, CONNIE RAMSEY, DARLA HUNTER,

DAVID M GOEKE, DAVID PIPER, DIANE WINGO, DON

MALINSKI, DONNA MOORE, DORIS SMITH, DORTHA

FROST, DOROTHY GODDARD, ELDRED RUSH, EMMA

SCHUBERT, FLORENCE SAYLORS, GENEVA WARD,

GERALD GRAVES, GINA COCKRUM, GLORIA CONROY,

HELEN SMITH, JAMES ALLWANDT, JOHN GODDARD,

JOHN WOODCOCK, KAREN BROWN, KAREN JEAN

CRAIG, KAREN LYNN CRAIG, KATHY CONWAY,

KATHY MILLER, LARRY KEMPFER, LENITA PETERS,

LESLIE MCBRIDE, LILLIAN MATHIS, LINDA ELDER,

LINDA S HOLLOWAY, LORA GROGAN, LORA

KELLERMAN, LOYCE JONES, MARCIA PAYNE, MAX

MCKENZIE, MICHAEL L CRAIN, NATALIE BRAND,

PAMELA FOLDEN, PATRICIA MASON, PATRICIA

HARRIS, PATRICIA MOORE, PAUL WISELY, REGINALD

HARGAN, RICHARD FREDERKING, ROBIN NICKENS,

RODNEY LEE, ROGER KILLINGSWORTH, RONALD

NEHRKORN, SARAH FAYE JONES, SHAWNA GUNTER,

SHEREE REID, SHERRIE KEMPFER, SHERRY CURRY,

SHIRLEY LEMING, TERRI TILLEY, THELMA BENDER,

VICKI CANNON, VIRGINIA KAPRAUN, VIRGINIA

MOSS, WAINOMIA BIRD, WILLIAM HIGGERSON,

2

53a

Appendix B

WILLIAM E WELLS and INTERNATIONAL LEATHER

GOODS, PLASTIC, SERVICE & NOVELTY WORKERS

UNION, LOCAL 352,

Plaintiffs,

V.

UNIVERSAL MUSIC AND VIDEO DISTRIBUTION, -

INC., PANASONIC DISC SERVICES CORPORATION,

MATSUSHITA UNIVERSAL MEDIA SERVICES LLC OF

AMERICA, INTERNATIONAL LEATHER GOODS,

PLASTICS, NOVELTY & SERVICE WORKERS UNION

and MIDWEST JOINT BOARD OF INTERNATIONAL

LEATHER GOODS, PLASTICS, NOVELTY & SERVICE

WORKERS UNION, “

Defendants.

JUDGMENT

This matter having come before the Court, the issues

having been heard, and the Court having rendered a decision,

IT IS HEREBY ORDERED AND ADJUDGED that the

plaintiffs’ claims against the Midwest Joint Board of the

International Leather Goods, Plastics, Novelty & Service

Workers Union are dismissed with prejudice;

IT IS FURTHER ORDERED AND ADJUDGED

that plaintiff Bonnie Hampsey’s claim_for violation of the

54a

Appendix B

Americans With Disabilities Act, 29 U.S.C. § 621 et seq.,

is dismissed without prejudice;

IT IS FURTHER ORDERED AND ADJUDGED that the

plaintiffs’ claims against defendant Universal Music and

Video Distribution, Inc., are dismissed without prejudice;

IT IS FURTHER ORDERED AND ADJUDGED that

judgment is entered in favor of defendants Panasonic Disc

Services Corporation and Matsushita Universal Media -

Services LLC of America and against the plaintiffs on their

claims under § 301 of the Labor Management Relations Act,

29 U.S.C. § 185; and

IT iS FURTHER ORDERED AND ADJUDGED that

judgment is entered in favor of defendant International

Leather Goods, Plastics, Novelty & Service Workers Union

and against the plaintiffs on their claims under § 9(a) of the

National Labor Relations Act, 29 U.S.C. § 159(a).

NORBERT JAWORSKI

Date: September 24, 2002 s/ K. Jane Reynolds

By: K. Jane Reynolds,

Deputy Cierk

Approved: s/ J. Phil Gilbert EOD: 9-24-02

J. PHIL GILBERT

“DESTRICT JUDGE