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Standard Motor Freight Inc. v. Local Union No. 560

Decided: March 20, 1967.


For modification and affirmance -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. Opposed -- None. The opinion of the court was delivered by Hall, J.


This labor relations case involves an aspect of so-called "procedural arbitrability" under a collective bargaining agreement between plaintiff, the employer, a motor trucking concern engaged in interstate commerce, and defendant, the union representing its employees. The underlying question -- one of interpretation of the contract -- is which of several grievance forums provided by the agreement has jurisdiction over a union complaint, conceded to be substantively arbitrable, arising from the particular circumstances of the termination of employment of one of plaintiff's drivers. More precisely, the problem is whether this termination concerned "a matter of discharge," requiring that the dispute take one procedural route, or whether it did not, and so should follow another course, having possible differing consequences as to final and binding effect. The initial issue is whether this question is to be answered by a court or by one of the forums created by the agreement.

The union considered the dispute not to concern "a matter of discharge" and so brought the grievance before the forum -- the first step intra-industry tribunal created by

the agreement -- designated to hear non-discharge complaints. The employer objected to the jurisdiction of the forum and would not participate in the hearing on the ground that the dispute was a discharge matter and so could be heard only by the tribunal -- outside arbitration -- appointed to decide such controversies. It refused to comply with the award in the employee's favor and, when the union threatened a strike, commenced this suit in the Chancery Division to vacate the award.

Both parties agree that the action, brought pursuant to section 301(a) of the Labor Management Relations Act of 1947, 29 U.S.C.A. ยง 185(a), Textile Workers Union of America v. Lincoln Mills, 353 U.S. 448, 77 S. Ct. 912, 1 L. Ed. 2 d 972 (1957), may be prosecuted in a state court, Local 174, etc. v. Lucas Flour Co., 369 U.S. 95, 82 S. Ct. 571, 7 L. Ed. 2 d 593 (1962). It is entirely clear, however, as both cited cases held, that substantive federal labor law, and not state law, is controlling. Accord: Donnelly v. United Fruit Co., 40 N.J. 61, 74-75 (1963); Jersey Central Power & Light Co. v. Local Union No. 1289, etc., 38 N.J. 95, 104 (1962); United States Pipe and Foundry Co. v. United Steelworkers of America, etc., 37 N.J. 343, 360 (1962).

The trial court, finding that the underlying question was one for judicial determination, decided it by holding that the dispute did concern "a matter of discharge" and so that the forum which rendered the award had no power to do so and the grievance fell rather within the sole jurisdiction of the outside arbitrator. It therefore vacated the award and directed submission to the arbitrator. The Appellate Division reversed, in an unreported per curiam opinion. It held that "the interpretation of the contract", i.e., which forum had jurisdiction, "and the application of such interpretation to the facts of the case" were, under the provisions of the agreement, "exclusively within the jurisdiction of" the second step intra-industry tribunal. It concluded that the trial court was in error in directing submission of the matter

to outside arbitration, but that the first step forum which rendered the award had no jurisdiction either. The effect, says the union, is improperly to compel presentation of the grievance anew to the second intra-industry forum. We granted cross-petitions for certification. 47 N.J. 562 (1966).

The bargaining agreement involved is the New Jersey-New York Area General Trucking Agreement, negotiated on an area-wide, multi-employer, multi-union basis and affecting thousands of employees in the trucking business. We are advised that the basic form of the instrument derived from one in similar use in other sections of the country, which was originally negotiated and in considerable part drafted by laymen engaged on both sides in the industry. It utilizes a nomenclature and provisions largely meaningful only to those intimately associated with the business and the negotiations. It is not, and indeed is not intended to be, a tight, integrated commercial contract. So there appear to us, as strangers to it, a number of ambiguities, imprecise uses of language and incomplete terms. We can well understand that all of this is a necessary result of the practicalities and time and other pressures of a bargaining negotiation. We recognize too that, by the very nature of a labor contract, affecting large numbers of people, covering a wide range of conduct and an enormous variety of problems, operating prospectively over a substantial period between parties who share a degree of mutual interdependence seldom associated with simple contracts, and based upon a mass of unstated assumptions and past practices, it is essentially an instrument of government, to be considered quite differently than ordinary commercial instruments. Cox, "Reflections Upon Labor Arbitration," 72 Harv. L. Rev. 1482, 1490-1493 (1959); Shulman, "Reason, Contract and Law in Labor Relations," 68 Harv. L. Rev. 999, 1004-1005 (1955). As the United States Supreme Court put it in United Steelworkers of America v. Warrior & Gulf Navigation

Co., 363 U.S. 574, 80 S. Ct. 1347, 4 L. Ed. 2 d 1409 (1960):

"The collective bargaining agreement states the rights and duties of the parties. It is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate * * * The collective agreement covers the whole employment relationship. It calls into being a new common law -- the common law of a particular industry or of a particular plant.

A collective bargaining agreement is an effort to erect a system of industrial self-government." (80 S. Ct., at p. 1351, 4 L. Ed. 2 d, at pp. 1415, 1416).

This concept furnishes further meaning to the statement in Lincoln Mills (77 S. Ct., at p. 918, 1 L. Ed. 2 d, at p. 980) that courts should fashion substantive federal labor law "from the policy of our national labor laws." Together they guide our approach and function in cases like this one.

As has been indicated, this agreement provides for three different grievance tribunals, two within the industry and one independent of it. Disputes are treated in two classifications, "matters of discharge" and all others. The former, unless the parties otherwise agree, go to the outside forum -- the New Jersey State Board of Mediation (formerly called and designated in the agreement as the New Jersey State Mediation Service), N.J.S.A. 34:13A-7 -- for final and binding arbitration. The others are submitted in the first instance to one of the Joint Local Committees, the first step intra-industry forum previously mentioned. Each of these local bodies, created by an earlier contract, is composed of three designees of the employers and three of the union or unions from a local area smaller in size than the entire New Jersey-New York area covered by the agreement. If this forum decides the matter by a majority vote, the decision is final and binding. If it cannot, by reason of the equal number of its members, the dispute is referred to the second step intra-industry tribunal, the Joint Area

Committee.*fn1 This body, likewise originally established by a prior contract, also comprises three appointees of the employers and three of the unions, but from the entire area covered by the contract. We are told that these persons were, for the most part, negotiators of the agreement. Again, if this body decides the dispute by majority vote, the determination is final and binding. If it deadlocks, there is no provision for further arbitration of the dispute unless the Joint Area Committee, by majority vote, decides to submit the matter to an umpire. Therefore, except in "matters of discharge," this agreement does not assure final and binding arbitration of grievances. In the event of deadlock, the no-strike, no lock-out clause of the contract ceases to be effective and either party may resort to "all legal or economic recourse."*fn2

Another function given to the Joint Area Committee is at the bottom of the controversy here. Section 2 of Article 7, the jurisdictional article, says that this committee "shall also act as final authority, except as otherwise provided in Article 8 of this Agreement, on all matters involving questions [49 NJ Page 90] of the meaning or import of any clause or provision of this Agreement, decisions which would have general application to the majority of Employers and Local Unions who are parties to this Agreement."*fn3 Article 8, the procedural article, does not contain any express exception to the interpretative authority given the Area Committee in Article 7. It does contain, however, several references thereto, chiefly procedural. Note should be taken, though, that there is no reference to it in section 1(a) which provides for the arbitration of "matters of discharge" by the outside tribunal. Section 1(b), dealing with matters before the Local Committee, says that matters of interpretation, apparently arising in a dispute being heard by that body, "shall be referred to the Joint Area Committee for final decision at the request of any party." Section 1(g), treating particularly of such matters, essentially repeats the quoted provision of 1(b) and further says that the reference may be "at any time." It goes on to provide that " all decisions of Joint Local Committees on all matters pertaining to the interpretation of this Agreement * * * shall automatically be reviewed by the Joint Area Committee and that any decision of the Joint Local Committee may be reviewed by the Joint Area Committee on its own initiative at any time if any member thereof has reason to believe such decision could be or is being construed as interpretation of contract as defined in this Agreement." (Emphasis added) The subsection then strongly reiterates the purpose of such procedure, which

had been earlier stated in Article 7, in this language: "The sole purpose of this paragraph is to assure clear and uniform understanding of the meaning of all provisions of this Agreement by all parties hereto." The thesis is clear enough that, while the parties realized each Joint Local Committee must necessarily engage in contract interpretation in passing upon almost every grievance, they desired that "final authority" thereon should repose in the Area Committee, composed of men who apparently participated in the ...

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