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United States Pipe and Foundry Co. v. American Arbitration Association

Decided: May 9, 1961.


Goldmann, Foley and Lewis. The opinion of the court was delivered by Goldmann, S.j.a.d.


This appeal, taken pursuant to leave granted, brings up for review a Chancery Division order, entered December 9, 1960, denying defendants' motions (1) for summary judgment and (2) to dissolve a temporary restraint granted July 1, 1960, enjoining defendants from proceeding to arbitrate the status of defendant Borkowski "as though he were a beneficiary under [the] labor contract" between plaintiff and defendant unions, referred to below. The order also continued the restraint of July 1, 1960, pendente lite. No affidavits were submitted on the motion for summary judgment. Consequently, we must accept as true all the well-pleaded facts of the verified complaint, and the inferences that may legitimately and reasonably be drawn therefrom.


Plaintiff employs some 892 persons at its Burlington, N.J., plant. Of these, about 680, constituting plaintiff's production employees, are members of defendant United Steelworkers of America, CIO-AFL and its affiliate, defendant Local Union No. 2026. Defendant Borkowski is a member of both unions.

On August 20, 1959 the then existing collective bargaining agreement between plaintiff and the unions expired. As a result, the unions called a strike in which the production employees, including defendant Borkowski, joined. See our earlier opinion in U.S. Pipe & Foundry Co. v. United Steelworkers of America, etc. , 59 N.J. Super. 240 (1960). The strike was settled when, after extended conferences, a new collective bargaining agreement was executed May 25, 1960. The production employees returned to work the next day.

By mutual consent the new agreement was predated to August 21, 1959, and specifically made effective as of that date. The complaint incorporates the new agreement by reference, so that the whole of the agreement was before the trial court at the time of the motion for summary judgment. Article V provides for a grievance and arbitration procedure available to all production employees:

"A. Should differences arise as to the meaning and application of the provisions of this agreement or should any employee feel unjustly treated because of the application of any provision, there shall be no interruption of work. Such matters shall be resolved in the following manner:

5. If the grievance is not settled in step 4, then within fifteen (15) working days it shall be submitted to arbitration under the Voluntary Labor Arbitration Rules of the American Arbitration Association."

Further, Article VII, dealing with discharge and suspension cases, provides:

"If an employee feels he has been unjustly discharged or suspended, a written grievance shall be submitted to the company within five (5) working days of the discharge. Within three (3) working days of the receipt of the grievance the company and the Grievance Committee shall review the grievance. A bona fide effort shall be made to settle the matter; but if not resolved within said three (3) working days, the grievance shall be referred to arbitration within fifteen (15) calendar days. Any grievance not processed within the time stated above shall be considered waived."

The complaint alleges that during negotiations leading to the new collective bargaining agreement plaintiff, at a negotiation meeting on December 2, 1959, notified the bargaining representatives of the unions, in substance, that it had terminated Borkowski's employment, "meaning in fact, that he had been discharged." It is pleaded that plaintiff had terminated the employment because it considered Borkowski's "acts of violence, assaults, threats and bad conduct during the progress of the strike [as] inimical to his continued employment, and * * * such that they could not be tolerated or condoned by it."

After Borkowski's discharge, and during the subsequent negotiations to settle the strike, plaintiff alleges that it consistently refused to rehire him or to arbitrate his status, and held to this position despite the fact that the union representatives submitted his rehiring or the arbitration of his status as one of the issues preventing settlement of the strike. The complaint goes on to allege that at a negotiation meeting held April 5, 1960 the union representatives agreed with plaintiff to drop their demands as to Borkowski; at meetings subsequently held on May 12 and 21, Borkowski's status was neither raised nor discussed; and on the latter date the representatives on both sides agreed that everything in dispute had been resolved, no mention being made of Borkowski.

Finally, plaintiff alleges that despite all this it received a letter from the international union on June 9, 1960 enclosing a demand for arbitration sent to defendant American Arbitration Association appealing a grievance signed by Borkowski. A few days later it received a letter from the Association enclosing a list from which an arbitrator might be selected and informing plaintiff that if the list was not returned by a date fixed, an arbitrator would be appointed. Plaintiff replied, stating that Borkowski was not an employee and refusing to arbitrate because he had been discharged for cause. The Association then informed plaintiff that it would have to proceed with the matter unless otherwise

requested by both parties or the moving party was stayed by order of an appropriate court.

The complaint charges, "according to the legal effect," that under the true construction of the labor contract in the light of the circumstances attending its negotiation and formulation, Borkowski is not its employee; the new agreement and its arbitration provisions were not intended for his benefit; there is no obligation on its part to arbitrate his status under the contract and, finally, there is no arbitrable issue as to him. Plaintiff demanded judgment: (a) construing and interpreting the agreement in the light of the surrounding circumstances, and determining and declaring that it was not the intention of the parties thereto that Borkowski should be benefitted thereunder; (b) determining and declaring that his status is not an arbitrable issue under the agreement; (c) restraining defendants pendente lite from proceeding to arbitrate Borkowski's status as though he were a beneficiary under the agreement; and (d) perpetually restraining them from attempting to make any findings or award with respect to his status which would be inimical to plaintiff's interests.

In opposing defendants' motions to dissolve the temporary restraint and for summary judgment, plaintiff argued that the sole issue was "whether or not the employment, or the failure to employ * * * Borkowski is an arbitrable issue, or one for the courts." It urged that the agreement was predated to August 21, 1959 for the purpose of continuing the life insurance and hospitalization benefits of its employees during the strike; that the demand for arbitration of Borkowski's discharge had been raised during the negotiations and dropped prior to the final settlement of all disputes between the parties and the execution of the new collective bargaining agreement on May 25, 1960, and therefore he was not a beneficiary thereunder. In the course of the ensuing colloquy the trial judge indicated that he was entitled to inquire into the reasons for predating the collective bargaining agreement and whether Borkowski should

be excluded from its benefits. In denying defendants' motions and continuing the restraint against arbitration the trial judge concluded that it was for the court to resolve whether there were any rights that should be determined by it under the existing contract, and that the matter should be held for full hearing.

In contending that summary judgment should have been entered in their favor, defendants argue that (1) the collective bargaining agreement, back-dated to August 21, 1959, was unambiguous and inured to Borkowski's benefit, and the court may not change its terms; (2) any difference as to the meaning and application of the provisions of the agreement are for the arbiter and not the courts, and (3) the union representatives had neither the power nor ...

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