Summary
finding that the district court correctly held the grievance was arbitrable where the contract did not expressly exclude a particular grievance from arbitration
Summary of this case from Constellium Rolled Prods. Ravenswood, LLC v. United Steel, Paper & Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int'l Union, AFL-CIO/CLCOpinion
No. 76-1340.
Argued October 4, 1976.
Decided November 30, 1976.
James P. Garland, Baltimore, Md. (David R. Owen and Lynne A. Battaglia, Semmes, Bowen Semmes, Baltimore, Md., on brief), for appellant.
Charles Lee Nutt (John R. Francomano and Stuart Levine, Francomano, Clements Park, Baltimore, Md., on brief), for appellee.
Appeal from the United States District Court for the District of Maryland.
Before HAYNSWORTH, Chief Judge, and RUSSELL and HALL, Circuit Judges.
This civil action was brought under Section 301 of the Labor Management Relations Act of 1947, 29 U.S.C. § 185(a), by Local 217 of the International Chemical Workers Union ("Union") against Lever Brothers Company ("Company") seeking injunctive relief to prevent the Company from transferring its Baltimore, Maryland, soap production operation to Hammond, Indiana, until the Company complied with what the Union contended were certain specified contractual prerequisites to the move. The District Court granted a temporary restraining order and then a preliminary injunction enjoining the plant relocation pending the completion of arbitration to construe certain terms of the labor contract and conditioned recovery on the injunction bond upon a determination by the District Court, the Court of Appeals, or the Supreme Court of the United States that the Company had been wrongfully enjoined or restrained.
The Company unsuccessfully moved to dissolve the injunction, the Union initiated grievance was found to be arbitrable, and an award was rendered in favor of the Company. The preliminary injunction expired, as ordered, and the Company presumably has relocated its plant facility. The Company appeals seeking a determination that the preliminary injunction was wrongfully issued, and also seeks a determination that the injunction bond should have been conditioned on the outcome of the arbitration. We affirm.
Three issues are involved in this appeal. They are: (1) whether the grievance filed by the Union should have been submitted to the arbitrator in accordance with the terms of the collective bargaining agreement; (2) whether the District Court properly issued the preliminary injunction in order to maintain the status quo pending the completion of arbitration; and (3) whether the District Court properly conditioned the security required by F.R.C.P. 65(c) to be provided by the Union based upon whether or not the Company should be found to have been wrongfully enjoined or restrained, instead of conditioning it upon the Company's success or failure on the merits of the arbitration.
I [4] ARBITRABILITY
The Company and the Union had entered into a collective bargaining agreement covering its plant located at Baltimore, Maryland. On October 28, 1975, the Company advised the Union that it was permanently closing its Baltimore plant and transferring that production to its Hammond, Indiana facility which was represented by the Oil, Chemical and Atomic Workers union.
The Union argued that since the Hammond plant was represented by a union other than the International Chemical Workers, then the Company action constituted "outside contracting" under the collective bargaining agreement, and the Union was entitled to "due consideration" before the actual assignment of work to the outside contractors (i. e. the transfer to Indiana) occurred.
Section 3.15 of the Agreement provided:
"The Union recognizes that there are functions, powers and authorities belonging solely to the Company, prominent among which, but by no means wholly inclusive, are the functions of . . ., the assignment of work to outside contractors after due consideration by the Company to the interests of regular employees. * * *"
This provision was amplified by a Memorandum of Understanding (called the "Shorey" letter) executed in 1957 which provided that although the final decision to contract work outside the plant remained a Company prerogative, it agreed to notify the Union in advance of its intention to contract out work and once that decision had been made, to furnish "full information" to the Union regarding the reasons for the action.
The Company argued that the transfer was an "elimination" under the collective bargaining agreement. requiring only two weeks written notice to the Union in advance of the move, which notice it had given. Thus, the release of "full information," necessary when there was a "contracting out," was not required.
Section 3.16 of the Agreement provided:
"Subject to the provisions of this Agreement . . . there shall be no interference with the functions of the Company as outlined in the following sub-paragraphs . . .:
"* * *
"(e) To permanently eliminate, change or consolidate jobs, sections, departments or divisions subject to advance written notice to the Union as specified in 3.16(e).
"(1) The following definitions apply to paragraph 3.16(e):
"(a) Elimination — When a job or jobs are permanently removed from a department, section, or division, and no portion of the duties are assigned to other jobs in the plant.
" * * *
"(2) When there is an Elimination the Union will be given two weeks advance written notice to arrange for applicable seniority moves.
"* * *"
Section 6.9, the grievance-arbitration clause, provided:
"Grievances within the meaning of the Grievance procedure and of this arbitration clause shall consist only of disputes about the interpretation or application of particular clauses of this Agreement and about alleged violations of the Agreement. The Arbitrator shall have not power to add to, or subtract from, or modify any of the terms of this Agreement, nor shall he substitute his discretion for that of the Company or the Union where such discretion has been retained by the Company or the Union, nor shall he exercise any responsibility or function of the company or the Union."
On November 14, 1975, the Union filed a grievance concerning the pending plant transfer, contended that it was "contracting out" rather than an "elimination" of work, and requested that the Company refrain from moving the plant until the "due consideration-full information" contractual prerequisites were met. The Company denied the grievance and this litigation ensued.
On appeal, the parties agree that the District Court initially had to determine whether the dispute was subject to arbitration under the collective bargaining agreement. International Union of Operating Engineers, Local 150 v. Flair Builders, Inc., 406 U.S. 487, 92 S.Ct. 1710, 32 L.Ed.2d 248 (1972), but they disagree that the issue presented was arbitrable.
The Union contends that its grievance concerned the interpretation of various clauses of the Agreement and was arbitrable. The Company contends that the District Court too readily found arbitrability and failed to determine first, what the dispute was, and second, whether the parties had contractually agreed to submit such a dispute to arbitration.
We hold that the District Court correctly determined, first, that a dispute did exist between the Company and the Union regarding the characterization of the plant transfer as an "elimination" or as "contracting out." Second, we hold that the District Court properly analyzed the parallels which existed between the broad arbitration clause in United Steelworkers of America v. Warrior Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960), and the above-quoted arbitration clause in this case, between the management rights clause in Warrior Gulf and language of similar import in this case, and correctly concluded that neither the contract in Warrior Gulf, nor the contract in this case expressly excluded a particular grievance from arbitration. Thus, the District Court correctly held the grievance in this case to be a matter for consideration by the arbitrator. In this case, it cannot be said with positive assurance that the arbitration clause was not susceptible of an interpretation that covered the asserted dispute. United Steelworkers of America v. Warrior Gulf Navigation Co., 363 U.S. 574, 582-3, 80 S.Ct. 1347. The question of the interpretation of the collective bargaining agreement was properly left to the arbitrator, and not predetermined by the Court on the ruling on the preliminary injunction. United Steelworkers of America v. Enterprise Wheel Car Corp., 363 U.S. 593, 599, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960); Buffalo Forge Co. v. United Steelworkers of America, AFL-CIO, 428 U.S. 397, 96 S.Ct. 3141, 3148-3149, 49 L.Ed.2d 1022 (1976).
That arbitration clause provided that:
"Should differences arise between the Company and the Union or its members employed by the Company as to the meaning and application of the provisions of this Agreement, or should any local trouble of any kind arise, there shall be no suspension of work on account of such differences but an earnest effort shall be made to settle such differences immediately in the following manner: [The 5-step procedure is then set forth]." ( 363 U.S. 574, 576, 80 S.Ct. 1347, 1349).
That clause provided that:
"Issues which conflict with any Federal Statute in its application as established by Court procedure or matters which are strictly a function of management shall not be subject to arbitration under this section." ( 363 U.S. 574, 576, 80 S.Ct. 1347, 1349).
See the grievance — arbitration clause quoted supra where it provides that the arbitrator is not to substitute his discretion for that of the Company or the Union where such discretion has been retained by the Company or the Union, nor exercise any responsibility or function of the Company or Union.
II [13] THE INJUNCTION PENDING ARBITRATION
Before issuing the preliminary injunction, the court below analyzed the prerequisites to the issuance of injunctive relief and concluded that as to the first prerequisite, the Union had shown a "probable right," that is, a likelihood that the Union would prevail at a trial on the merits. The court equated this with the likelihood that the Union would prevail in its contention that the dispute in issue was one for the arbitrator. Thus, the preliminary injunction was issued halting the transfer of the plant and insuring the maintenance of the status quo until the arbitration could be completed.
The other two prerequisites are the existence of a "Probable danger" that the right may be defeated, which necessarily requires a showing of irreparable injury if the injunction was not granted, and that the need to protect the plaintiff's rights clearly outweighs the possible injury to the defendant should the injunction issue. West Virginia Highlands Conservancy v. Island Creek Coal Co., 441 F.2d 232 (4th Cir. 1971). The reasoning of the District Court regarding the satisfaction of these two prerequisites is not challenged here.
The Union contends that the injunction properly issued to protect its contractual right to arbitrate grievances and had it prevailed in the arbitration, it would have been provided with "full information" regarding the reasons for the transfer and would have marshalled economic evidence to attempt to persuade the Company not to make the transfer. Thus, the injunction preserved the status quo in order to save the arbitration clause. See: Amalgamated Transit Union, Division 1384 v. Greyhound Lines, Inc., 529 F.2d 1073 (9th Cir. 1976).
The decision in Greyhound Lines, vacated and remanded for reconsideration by the Supreme Court the day oral arguments were held in this case, and now reversed by the Ninth Circuit, is dealt with in the Addendum to this opinion. post. Suffice it to say that we adhere to all our holdings in this case.
The Company contends that although injunctive relief may have appropriately issued to require arbitration, it was inappropriate to also enjoin the transfer of the plant, since the arbitrator could not halt the transfer and only could require compliance with the "Shorey" letter relying upon Hoh v. Pepsico, Inc., 491 F.2d 556 (2nd Cir. 1974).
See Note 1, supra.
For a post Hoh, post Buffalo Forge decision, following Hoh and discussing Buffalo Forge, See Communication Workers of America v. Western Electric Company, 430 F. Supp. 969 (S.D.N.Y., filed March 23, 1977).
We find the reasoning in Greyhound Lines, supra, a case with similar facts to the case sub judice, more persuasive than that contained in Pepsico, and hold, as did the court in Greyhound Lines, that:
". . . a plaintiff, without regard to whether he is the employer or the union, seeking to maintain the statute quo pending arbitration pursuant to the principles of Boys Markets [Inc., v. Retail Clerks Union, 398 U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970)] need only establish that the position he will espouse in arbitration is sufficiently sound to prevent the arbitration from being a futile endeavor. If there is a genuine dispute with respect to an arbitrable issue, the barrier [to the issuance of an injunction] we believe appropriate[ly sic] has been cleared." ( 529 F.2d 1073, 1077-1078).
The District Judge did not abuse his discretion by issuing the preliminary injunction preserving the status quo until the completion of the pending arbitration.
III [19] THE CONDITIONS OF THE BOND
The District Court conditioned the issuance of the preliminary injunction upon the Union filing a bond in the amount of $60,000 as security for the payment of such costs and damages as may have been incurred or suffered by the Company should it later have been determined by the District Court, the Court of Appeals, or the Supreme Court of the United States that the Company had been wrongfully enjoined or restrained. See Rule 65(c) of the Federal Rules of Civil Procedure.
The Company contends that the bond should have been conditioned upon the outcome of the merits of the arbitration and not left for determination by the courts.
We hold that the District Court correctly conditioned the injunction bond upon the possible wrongful issuance of the preliminary injunction, and not upon the outcome of the merits of the arbitration. Rule 65(c) of the Federal Rules of Civil Procedure does not stand as authority that injunction bonds in labor cases are to be conditioned on the outcome of the merits of arbitration. Rather, it is settled that the recoverable damages under such a bond are those that arise from the operation of the injunction itself and not from damages occasioned by the suit independently of the injunction. Greenwood County v. Duke Power Co., 107 F.2d 484, 489 (4th Cir. 1939); Amalgamated Transit Union, Division 1384 v. Greyhound Lines, 529 F.2d 1073, 1079 (9th Cir. 1976); 7 J. Moore, Moore's Federal Practice, ¶ 65.10[1], 65-96, 97 (1976); 11 C. Wright A. Miller, Federal Practice and Procedure, § 2973, 652-654 (1973).
We are in agreement with the Third and Ninth Circuits that an injunction bond posted in a Boys Markets case is payable only if the preliminary injunction is found to have been wrongfully issued, where, for example, the court erroneously issues a preliminary injunction over a labor dispute not covered by the grievance-arbitration provisions of the contract. See Amalgamated Transit Union, Division 1384 v. Greyhound Lines, 529 F.2d 1073, 1079 (9th Cir. 1976); United States Steel Corporation v. United Mine Workers of America, 456 F.2d 483, 488 (3rd Cir. 1972). Further, as the court noted in Greyhound Lines, to accept the Company's contention that the bond should be contingent upon the merits of the arbitration in this case would be inconsistent with our holding in Part II supra that a showing by the Union of probable success in the arbitration is not necessary in order to obtain a Boys Market preliminary injunction. Amalgamated Transit Union, Division 1384 v. Greyhound Lines, 529 F.2d 1073, 1077.
Boys Markets, Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970).
We add only that the parties to the collective bargaining agreement did not agree to indemnify one another contingent upon the outcome of arbitration rather, they agreed to arbitrate. As we have held in Parts I and II of this opinion, the preliminary injunction was properly issued pending arbitration over an arbitrable dispute, and therefore was not wrongfully issued. The requirement that the injunction bond be posted in accordance with Rule 65(c), F.R.C.P., was correct, and the action of the District Court is
AFFIRMED.