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FLINTKOTE CO. v. TEXTILE WORKERS UNION

June 29, 1965

The FLINTKOTE COMPANY, a Massachusetts corporation, Plaintiff,
v.
TEXTILE WORKERS UNION OF AMERICA, an unincorporated Association, Defendant



The opinion of the court was delivered by: SHAW

Plaintiff (employer) commenced an action against defendant (union) in the Superior Court of New Jersey seeking to restrain defendant from processing an alleged grievance under a collective bargaining agreement to arbitration. Defendant caused the removal of the action to this Court on petition alleging that it was one arising under § 301(a) of the Labor Management Relations Act, 29 U.S.C.A. § 185(a), and that this Court has original jurisdiction by virtue of § 301(c), 29 U.S.C.A. § 185(c). Defendant filed an answer to plaintiff's complaint and a counter-claim by which it seeks to compel plaintiff to submit to arbitration. Defendant now moves for judgment on the pleadings granting the relief sought by its counter-claim.

The pertinent facts which are not in dispute as evidenced by the pleadings may be summarized briefly as follows:

 Plaintiff is a corporation authorized to do business in the State of New Jersey and it maintains a factory or place of business at East Rutherford, New Jersey. Defendant is an unincorporated association maintaining an office for the conduct of its business at East Paterson, New Jersey. Defendant is the recognized collective bargaining agent for certain employees of plaintiff at its East Rutherford plant and is a party to a collective bargaining agreement with plaintiff covering such employees. The term of this agreement was from April 27, 1962 to April 29, 1965. On or about January 10, 1964, plaintiff distributed a notice to all of its employees at the East Rutherford plant which reads as follows:

 'TO THE EMPLOYEES OF THE FLINTKOTE DIVISION EAST RUTHERFORD AND LITTLE FERRY PLANTS It is with deep regret that we announce the discontinuance of all operations at the East Rutherford and Little Ferry plants effective February 14, 1964. Much effort has been expended by many people in an endeavor to reduce costs and place these operations on an economically sound basis, but we remain unable to price the products of these plants at a level which will provide a profit. Additional capital expenditures cannot be expected to produce an economically sound manufactured cost sales ratio, and therefore we are reluctantly compelled to discontinue operations. We wish to express our sincere appreciation for the excellent company-employee relationship which has existed during the years.'

 Following this notice, plaintiff discontinued a substantial part of its operations at its East Rutherford plant and, as a result of partial plant closure, employment of certain union members was terminated. On April 8, 1964 defendant submitted the following stated grievances to plaintiff:

 '(1) Union demands payment to terminated employees of accumulated severance units under Article XI of the contract regardless of attained age, because the company's closure of the plant prevents employees from attaining age 65 during the term of this or succeeding contracts. (2) The union demands payment of lost wages, or other appropriate damages, to all employees terminated as a result of plant closure, and lost dues to the Union, to the termination date of the contract. By representing to the union during negotiations that the plant would remain in operation during the term of the contract, the company induced the union to withdraw its demand for severance pay, and the contract is an implied agreement by the company to keep the plant in operation for at least the term of the contract.'

 The grievances could not be satisfactorily adjusted and defendant requested arbitration. Plaintiff has agreed that grievance No. 1 is arbitrable under the terms of the collective bargaining agreement and has agreed to submit it to arbitration in accordance with the arbitration provisions of the collective bargaining agreement. It refuses to submit to arbitration on grievance No. 2. The pertinent provisions of the collective bargaining agreement relating to arbitration are quoted as follows:

 'Any matter involving the application and/or interpretation of this Agreement, or any grievance of an employee, which is subject to this Agreement, shall be handled as herein below set forth.' 'Any grievance which is not satisfactorily adjusted * * * shall be promptly referred to arbitration.' '* * * The Arbitrator shall have no jurisdiction or authority to add to, subtract from, modify or alter any terms of this Agreement or any Agreements made supplemental hereto, without consent of the Employer and the Union * * *.'

 Plaintiff alleges that grievance No. 2 does not involve the application and/or interpretation of the collective bargaining agreement and further alleges that this grievance is not one 'of an employee subject to said written agreement.' *fn1"

 It seems to be conceded by the pleadings and the arguments of counsel that there was no express provision in the contract *fn2" relating to severance pay or any other express provision relating to termination of employment by plant closure out of which a grievance could arise. The position taken by defendant, as far as the Court can determine from the pleadings and argument of counsel, is that there would have been a provision in the labor agreement providing for severance pay if the union had not been induced during negotiations of the labor agreement to withdraw a demand for severance pay. The inducement, according to defendant, was a representation by plaintiff 'that the plant would remain in operation during the term of the contract.' In substance defendant argues that resort to the history of the bargaining negotiations will produce evidence which an arbitrator may consider to resolve the question of whether or not the term fixed by the agreement was the result of mutual understanding on the part of the parties that it be unconditional and irrevocable in point of period of time as to plaintiff, whereby any shut down of operations at the East Rutherford plant during the term would constitute a breach of the agreement.

 Generally a labor agreement, regardless of the period of duration fixed by the parties, remains in effect during such period only so long as the underlying employer-employee relationship which brought it into being continues to exist. It can serve no future continuing purpose after that relationship has been dissolved. This circumstance is inherent by the very nature of this type of agreement governing an employer-employee relationship. Therefore, in the absence of some provision in the labor agreement to the contrary, there is no obligation to pay wages or confer other benefits after employment has been terminated by a valid *fn3" discontinuance of the employer's business. See Leather Workers' Union v. Brodsky and Son (E.D.Pa. April 28, 1964), 56 L.R.R.M. 2121. In that case the Court stated:

 'Inasmuch as the duty to arbitrate is contractual and since the contract in this case is to arbitrate matters concerning the meaning and application of the provisions of the collective bargaining agreement, we must look to that agreement to find provisions concerning whose meaning or application the dispute as to the three points mentioned exists.' 'As to the company's action in shutting down the plant and its failure to give advance warning of its intention to do so, the plaintiff has not been able to point to any provision in the contract that it seeks to have applied or interpreted, and, from an examination of it, I find no provision that could be applied or interpreted. As a result, I cannot find that the parties have agreed to arbitrate this matter.' (p. 2122)

 This does not mean that rights in the nature of fringe benefits established by the provisions of the labor agreement and vested are necessarily extinguished by termination of the employer-employee relationship. See Good-all-Sanford, Inc. v. United Textile Workers, 233 F.2d 104 (5th Cir. 1956) aff'd. 353 U.S. 550, 77 S. Ct. 920, 1 L. Ed. 2d 1031 (1957); Oddie v. Ross Gear and Tool Co., 305 F.2d 143 (6th Cir. 1962), cert. denied, 371 U.S. 941, 83 S. Ct. 318, 9 L. Ed. 2d 275 (1962).

 The difficulty here is that defendant's position cannot be maintained on the basis of any language of the labor agreement to which it points. Nor is it contended that there was any ambiguity in the language used fixing the term of the agreement. What defendant seeks to establish and import into the agreement is a collateral understanding of what was intended by the term fixed, supported by alleged evidence to be derived from the history of the bargaining negotiations. Except for the naked assertion of defendant that plaintiff represented that it would not close its plant during the term of the agreement, ...


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