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May 31, 1973

Local 368, United Federation Of Engineers, International Union Of Electrical, Radio And Machine Workers, AFL-CIO, Plaintiff,
Western Electric Company, Inc., Defendant

The opinion of the court was delivered by: LACEY

LACEY, District Judge.


 Defendant (hereinafter sometimes the Company) seeks summary judgment, or alternatively, partial summary judgment, under Fed. R. Civ. P. 56.

 Plaintiff (hereinafter referred to as either plaintiff or Union), was formerly the exclusive bargaining representative for the professional engineers and engineering associates employed by defendant in its New Jersey plants. The instant litigation involves 11 of defendant's former engineering personnel.

 Defendant, a New York corporation, is a manufacturing and supply unit of the Bell Telephone system.

 The complaint alleges breach of the parties' collective bargaining agreement (Agreement), which became effective August 1, 1969, charging that defendant in 1970 improperly laid off the aforesaid 11 engineering personnel. The impropriety is said to be found in there being no lack of work at the time, contrary to defendant's position. Alternatively, the Union charges that even assuming lack of work, the said employees were selected for layoff status in violation of the criteria of Article 20 of the Agreement. *fn1" Finally, the Union asserts there was in fact no layoff and that the men were discharged in violation of Article 22 of the Agreement. *fn2"

  It is undisputed that on September 22, 1970, defendant notified plaintiff, by letter of Mr. J. J. Shaughnessy, its Director of Industrial Relations, that the following employees were to be laid off: Messrs. Mody, Newton, Khan, Marasigan, Nigro, Pytlik, Ching, Fers, Jarvis, Malinowski and Orzynski.

 On September 23, 1970, the Union responded by filing a grievance with defendant, complaining that the employees were really being replaced and not laid off as stated by defendant. Mr. Shaughnessy, by letter of October 15, 1970, reiterated that the employees involved were being laid off due to a lack of work, pursuant to the Article 20 criteria of the Agreement.

 Plaintiff's complaint alleges that thereafter the Agreement's grievance procedures were "fully utilized" and that "no further steps" could be taken by the Union "under the grievance or arbitration provisions of the contract." Defendant's answer asserts, however, that the Agreement's grievance procedures were not completed or exhausted on behalf of any of the 11 men, and further, that in the case of 6 of the employees, no grievances were processed at all.

 After the processing of at least some of the grievances, the Union then filed its complaint herein seeking essentially the following relief:

 1. A judgment adjudging the defendant to be guilty of violating Article 20 of the agreement by separating the 11 employees from their work; also that they be reinstated without loss of seniority or loss of pay.

 2. A judgment finding the Company in violation of Article 22 of the contract due to discharging the employees and refusing to arbitrate the propriety of the discharges; further, that the Company be ordered to submit to arbitration on the issue of whether the discharges were properly made pursuant to Articles 22 and 24 of the contract.

 This suit alleges a violation of a labor contract between a certified bargaining representative and an employer. Plaintiff is a "labor organization" within the meaning of 29 U.S.C. § 152(5); and defendant is an "employer" within the statutory definition of 29 U.S.C. § 152(2), and in interstate commerce under 29 U.S.C. § 152(7). The Union has represented its members employed by the defendant within the District of New Jersey; therefore, this Court has subject matter jurisdiction over this suit and venue is proper. 29 U.S.C. § 185.

 As previously stated, the Agreement became effective August 1, 1969, and was in force when the 11 named employees were separated from their employment on or about October 21, 1970.

 The Agreement expired on December 6, 1971, and on August 29, 1972, the Union was decertified as the exclusive bargaining representative of defendant's engineering personnel. The complaint herein was filed on November 12, 1970. The subsequent expiration of the Agreement, and decertification, do not affect the Union's standing to prosecute claims that arose when the collective bargaining agreement was in effect. John Wiley & Sons v. Livingston, 376 U.S. 543, 11 L. Ed. 2d 898, 84 S. Ct. 909 (1964); United States Gypsum Co. v. United Steelworkers of America, 384 F.2d 38, 46 (5th Cir.), cert. denied, 389 U.S. 1042, 19 L. Ed. 2d 832, 88 S. Ct. 783 (1968).

 Plaintiff during the various stages of this litigation has vacillated greatly in its position. Initially, as set out in its complaint, three contentions were asserted:

 1. There was no true lack of work within the meaning of Article 20, because the work performed by the former employees continued to be done after their separation by other employees; further, there was other available work which the former employees were qualified to perform, but that this employment was given to newly hired employees.

 2. If there was a bona fide lack of work, then the former employees were not selected for layoff status according to the procedure provided for in Article 20.

 3. The employees were in fact discharged and not laid off; further, the employer violated Article 22 by treating the employees as being laid off, thereby denying the Union the right to proceed to arbitration.

 On March 8, 1971, on oral argument before Judge Reynier J. Wortendyke, Jr., the Union appeared in response to defendant's motion to dismiss the complaint. *fn3" Plaintiff abandoned its claim under paragraph 11, namely, that the men were discharged and not laid off, as is clearly evidenced by its counsel's statements to Judge Wortendyke (Tr. p. 24; March 8, 1971):


And if your Honor sees fit, we would agree, your Honor, to striking Paragraph 11 from the complaint, because we believe that that is all the motion to dismiss goes to, is Paragraph 11.

 During the same hearing (Tr. pp. 12, 15), the Union's position was that the lack of work issue was a fact question to be determined by the Court at trial; and the Union at that time apparently surrendered its claim to arbitration under Article 22.

 The abandonment of paragraph 11 was affirmed by plaintiff's pre-trial memorandum of November 26, 1971 (p. 7) and again in plaintiff's pre-trial statement of January 12, 1973 (p. 8).

 Consequently, the Union's position at that juncture of the litigation was to have the Court try the issue whether there was a lack of work or not, under the Agreement's Article 20, which precludes arbitration of the lack of work issue. The next step plaintiff, under its previously stated position, would have had this Court take (assuming a finding of lack of work) would be to determine whether the laid off employees were properly selected for layoff under the contract provisions covering employment separation. See plaintiff's pre-trial statement of January 12, 1973 (p. 9).

 Now, incomprehensibly, against the foregoing background, the Union in its brief of January 29, 1973, in opposition to defendant's instant motion for summary judgment, alters its prior positions (Brief, pp. 2 and 26). It now contends that the lack of work issue is to be determined not by the Court, but by an arbitrator, a contention renewed on oral argument before this Court on January 31, 1973 (see Tr. pp. 16, 22; and see p. 25):


The Court: Whether there was, in fact, a lack of work or not?


Mr. Warshaw: Yes, your Honor, but the difficulty I have that is for an arbitrator to determine, not the Court, with all due deference --. . . .

 During the same argument, the Union resurrected the previously discarded averments of paragraph 11 of the complaint (Tr. p. 16).

 The Union's latest position is, therefore, that defendant's motion for summary judgment should be denied, and that this Court should order the case to arbitration for determination thereof whether there was a lack of work or not, and whether there has been any abandonment of claims or not.

 The defendant contends that there is no material issue of fact in dispute before the Court; and that at issue is a matter of law, an interpretation of the Agreement relating to Article 20 thereof (not, it is noted, Article 22). Defendant predictably states that plaintiff has long since expressly abandoned its Article 22 allegation, as embodied in paragraph 11 of the complaint, and thus should be precluded from contending for arbitration now.

 Putting its position affirmatively, defendant seeks summary judgment and dismissal of the Union's complaint because the Union now argues discharge rather than layoff; and, further, that a discharge is arbitrable under the Agreement only when, unlike here, the grievance procedure has been exhausted.

 Defendant further states that the issue of whether a layoff was truly the basis for the dismissal (rather than discharge) is specifically made unarbitrable by the Agreement (see Article 24).

 In summary then, the respective positions of the parties under the Agreement on the present motion can be essentially stated as follows: plaintiff would have the Court send the dispute to arbitration; defendant urges summary judgment dismissing the complaint and judgment that arbitration is precluded by the Agreement under the stipulated facts of this case.

 A statement of certain fundamental legal principles is appropriate. A collective bargaining agreement is not an ordinary contract; it is intended to cover the whole employment relationship. John Wiley & Sons v. Livingston, 376 U.S. 543, 550, 11 L. Ed. 2d 898, 84 S. Ct. 909 (1964); United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 578-581, 4 L. Ed. 2d 1409, 80 S. Ct. 1347 (1960); Richardson v. Communications Workers of America, 443 F.2d 974, 978 (8th Cir. 1971); Roadway Express, Inc. v. General Teamsters, etc., Local 249, 330 F.2d 859 (3d Cir. 1964). Nonetheless, general canons of contractual construction and interpretation are not to be renounced in arriving at the parties' intended meaning as expressed therein in such an agreement. Independent Oil Wkrs. at Paulsboro, N.J. v. Mobil Oil Corp., 441 F.2d 651 (3d Cir. 1971); Ludwig Honold Mfg. Co. v. Fletcher, 405 F.2d 1123 (3d Cir. 1969); see also 3 Corbin on Contracts § 535.

 Federal courts have the responsibility for initially determining whether the parties have contractually agreed to arbitrate contested matters, and whether the appropriate arbitration clause on its face governs the dispute. United Steelworkers of America v. American Mfg. Co., 363 U.S. 564, 567-568, 4 L. Ed. 2d 1403, 80 S. Ct. 1343 (1960); Avco Corp. v. Local Union No. 787 of Int. U., U.A.A.F.A. Imp. Wkrs., 459 F.2d 968, 973 (3d Cir. 1972); Philadelphia Lith. & Photo. Int. U.L. 7-P v. Parade Pub., Inc., 352 F. Supp. 634 (E.D. Pa. 1972).

 Additionally, as noted by Philadelphia Lith., supra, at page 638:


. . . before the court can deny an order to arbitrate it must have "positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute," resolving any doubts in favor of coverage. United Steelworkers of America v. Warrior and Gulf Navigation Co., 363 U.S. 574, 581-583, 80 S. Ct. 1347, 1353, 4 L. Ed. 2d 1409 (1960). Accord, e.g. United Steelworkers of America v. Enterprise Wheel and Car Corp., 363 U.S. 593, 80 S. Ct. 1358, 4 L. Ed. 2d 1424 (1960); Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241, 82 S. Ct. 1318, 1320-1321, 8 L. Ed. 2d 462 (1962); John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 546-547, 84 S. Ct. 909, 912-913, 11 L. Ed. 2d 898 (1964); Boys Markets, Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235, 253-254, 90 S. Ct. 1583, 1594, 26 L. Ed. 2d 199 (1970); Avco Corp. v. Local Union No. 787 of the International Union, U.A., A. & A. Imp. Wkrs., 459 F.2d 968, 973 (3rd Cir. 1972).

 The one contested matter the parties agree is properly before the Court is whether the action taken by the Company in laying off the 11 employees is subject to arbitration. The second contested matter, which the Company claims has been abandoned by the Union, is, if the separation from employment was other than a layoff (i.e., a discharge), can the propriety thereof now be determined by arbitration.

 The Congressional policy encouraging arbitration as a means of settling labor disputes has been strongly supported by judicial decisions. See Boys Markets, Inc. v. Retail Clerks Union Local 770, 398 U.S. 235, 26 L. Ed. 2d 199, 90 S. Ct. 1583 (1970); Ice Cream Drivers and Employees U. Local 757 v. Borden, Inc., 433 F.2d 41 (2d Cir. 1970). In Price v. International Bro. of Teamsters, etc., 457 F.2d 605, 610 (3rd Cir. 1972), this policy was noted:


In 1960, in the Steelworkers trilogy the Supreme Court reinforced the Congressional policy set out in Section 203(d) of the Labor Management Relations Act, 29 U.S.C. § 173(d), that private dispute settlement was the desirable method for settling grievance disputes. The opinions stressed the utility of industrial self-government and the wisdom of having an arbitrator decide problems left by gaps in contracts.

 As is evident, there is strong support for the federal policy that arbitration is favored in settling labor disputes. Avco Corp. v. Local U. No. 787 of Int. U., U.A., A.F.A. Imp. Wkrs., supra.

 Recognizing this policy, it is nevertheless true that even though it


is now firmly established that the policy of Federal Labor Law is to favor arbitration of disputes between labor and management, but since neither Congress nor the Supreme Court has gone so far as to require this procedure in all cases, the sina qua non is a contract between the parties which binds them to this extra-judicial method of resolving disputes. Independent Oil Wkrs. at Paulsboro, N.J. v. Mobil Oil Corp., 441 F.2d 651 (3rd Cir. 1971), at 652.

 It is clearly a matter for the court to determine whether or not the company is bound to arbitrate under the collective bargaining agreement. Independent Oil Wkrs., supra at 653. In making that determination the court will not rewrite the agreement and will not order arbitration in the absence of a contractual obligation to arbitrate. Independent Oil Wkrs., supra ; see also, Boeing Company v. International Union, U.A., A. & A. Imp. Workers., 370 F.2d 969, 970 (3d Cir. 1967).

 There are two approaches under which plaintiff apparently seeks to have this dispute arbitrated. First, arbitration should be ordered to determine if there was a lack of work and also to establish whether in the event of a lack of work whether the company applied the proper contractual standards in selecting the 11 men for layoff. Second, in the alternative, assuming no lack of work, the Union contends that the men were discharged or fired, a removal subject to arbitration. It is this second claim that defendant argues plaintiff has repeatedly abandoned.

 The rights and duties of the parties as to arbitration under the Agreement are best determined by analyzing the appropriate contractual provisions and giving them the meaning reasonably intended by each side.

 In conducting its business, the Company has the benefit of a broad management clause (Article 3) which reads:




Except as limited by the specific undertakings expressed in this Agreement, the COMPANY shall continue to have the right to take any action it deems appropriate in the management of the business in accordance with its judgment.

 The Company, in its letter of September 22, 1970, to the President of the Union gave notification that the 11 therein named employees were to be laid off. This notice was proper and in keeping with Article 6 of the Agreement which provides:




1. The employee's Supervisor shall notify the Union Representative designated by the Union, in advance when practicable, of the following:


1.1 Transfers involving changes of an employee's status.




1.3 Disciplinary Action.


2. In order to afford the Union an opportunity to arrange for such replacements as may be necessitated by the transfer of Union Representatives, the Company agrees to notify the Union in writing of the transfer of any Union Representative outside the recognized bargaining unit. Such notice shall be given as far in advance as possible, but not less than one (1) week prior to the effective date of the transfer.

 The Union responded by the initiation of a grievance. Its letter of September 23, 1970, to Mr. Shaughnessy indicated that the Company had used "the pretense of 'Lack of Work'" to discharge these employees and replace them with newly hired engineering personnel.

 The Company, by its letter of October 15, 1970, indicated that it was laying off the men due to a lack of work and was acting properly under Article 3 of the Agreement. Furthermore, the Company indicated that the 11 men were selected for layoff according to the Article 20 criteria. *fn4"

 It should be indicated at this point, that the Agreement expressly defines the term "layoff." Article 5, § 1.7, provides:




A termination of employment arising out of a reduction in the force due to a lack of work. Under the following circumstances an employee's service shall not be considered terminated by LAY-OFF nor shall he be considered LAID OFF.


1. When his services are temporarily interrupted because of but not limited to such causes as material shortage, equipment failure, power failure, labor dispute, or other circumstances which cause a temporary cessation or reduction in operations;


2. When he is not reinstated from Leave of Absence.

 The dispute between the parties centers on whether there was a lack of work or not and what contract remedies are available on the issue. It appears clear that the procedure for resolution of this controversy is provided for under Article 20, § 5, of the Agreement:


If the Union objects to any move made in accordance with the provisions of this Article within ten (10) days after the effective date of such move, the matter may be processed in accordance with Article 23, GRIEVANCE PROCEDURE, but shall not be subject to the provisions of Article 24, ARBITRATION.

 Plaintiff's complaint (para. 8) alleges that the grievance procedure was pursued and utilized on behalf of the 11 employees and that since no further steps could be taken on their behalf under the grievance procedure, the suit was initiated.

 Defendant's answer flatly denies exhaustion of the grievance procedure and, in its Fifth Separate Defense, the Company asserts that the grievances were not in fact fully processed, and that the status of each employee under the grievance procedure was as follows:

 1. Fers, Malinowski -- grievances were dropped after the first step;

 2. Khon, Orzynski, Ching -- grievances are yet to be processed through step 5;

 3. Marasigan, Nigro, Pytlik, Mody, Jarvis, Newton -- no grievances were processed at all.

 The parties have signed a stipulation which affirms the foregoing grievance status; namely, that the grievance procedure was not fully utilized on behalf of 5 of the men, and not utilized at all on behalf of 6 of them. Thus, as to all of the 11 men, the grievance procedure was not fully completed through the 5-step contract requirement.

 The Union would avoid this lack of exhaustion by the specious argument that Article 20, § 5, states that grievances may be processed in accordance with Article 23, GRIEVANCE PROCEDURE. It then argues that "may be" is permissive but not mandatory, and that failure to do so is not fatal to its position now.

 The Company, on the other hand, states that the plaintiff, because it elected not to complete the 5-step grievance procedure, failed to exhaust its contractual remedies and is barred from maintaining this litigation. Defendant further argues that, should the plaintiff's claim be arbitrable, plaintiff is barred from arbitration, again because of its failure to exhaust the Agreement's grievance procedure.

 The separation from employment, if it was a layoff, is not subject to arbitration under the Agreement. A layoff of employees is a movement of personnel under Article 20. Pursuant to § 5 of that Article, the Union may process a grievance within 10 days of the layoff, but such a separation of employees "shall not be subject to the provisions of Article 24, ARBITRATION." As I have earlier demonstrated, the Union, at least at one point in this litigation, conceded that a layoff is not subject to arbitration. (See Tr. p. 15; March 8, 1971).

 It must inevitably follow that the issue as to the existence of lack of work, to sustain a layoff, is covered by Article 20, which precludes arbitration thereof.

 Additionally, plaintiff's interpretation of Article 20, § 5, suggesting that the pursuit of the grievance procedure is completely within its discretion, is untenable. If this construction were accepted, the Union members would have no recourse at all, within the confines of the Agreement at least, to contest a layoff, for Article 20 controversies are subject only to grievance proceedings, not arbitration. It is hardly compatible with other provisions of the Agreement, including the broad Management clause, to take the view that, if the Union eschews the grievance procedure, it can, at its whim, take the Company into court. *fn5" The sounder and more consistent "discretionary" nature of Article 20 is that either the Union may accept the decision of the Company to layoff as final, or it "may" protest and then invoke the grievance procedure. There is of course always judicial review, but obviously of narrow scope. United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 4 L. Ed. 2d 1424, 80 S. Ct. 1358 (1960); Ludwig Honold Mfg. Co. v. Fletcher, supra ; Newark Wire Cloth Co. v. United Steelworkers of Am., 339 F. Supp. 1207 (D.N.J. 1972).

 If the Union does file a grievance to challenge the Company's action, it must proceed pursuant to Article 23, which provides:




1. To provide for the expeditious and mutually satisfactory settlement of grievances arising with respect to wages, hours of work and other conditions of employment, the procedures hereinafter set forth shall be followed.


2. When an employee or group of employees wishes to have a grievance presented for settlement by the UNION, such grievance shall be presented as outlined below, and settlement effected at any one of the steps indicated:

  ORAL OR INFORMAL PROCEDURE Step Representing the Union (1) Discussion at Section One (1) Union Repre- Chief Level (when sentative applicable) (2) Discussion at De- One (1) Union Represen- partment Chief Level tative (3) Discussion at As- Two (2) Union Repre- sistant Manager Lev- sentatives el


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