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FALSTAFF BREWING CORP. v. LOCAL NO. 153

November 3, 1978

FALSTAFF BREWING CORPORATION, Plaintiff,
v.
LOCAL No. 153, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, Defendant, LOCAL UNION No. 153, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, and unincorporated labor union, Plaintiff, v. FLASTAFF [FALSTAFF] BREWING CORPORATION, a corporation of the State of Delaware and authorized to do business in the State of New Jersey, Defendant.



The opinion of the court was delivered by: MEANOR

Local No. 153, International Brotherhood of Teamsters (hereinafter "Union") has moved to enforce an arbitration award against Falstaff Brewing Corporation (hereinafter "Falstaff"). Falstaff has filed a cross-motion seeking to reopen Civil No. 76-1383 and consolidate that matter with Civil No. 78-1483 (the Union's enforcement action). Falstaff also seeks to vacate the arbitration award. At a hearing on these motions held October 10, 1978, this court granted Falstaff's motion to reopen Civil No. 76-1383 and to consolidate it with Civil No. 78-1483. At that hearing, Falstaff was also granted leave to file an amended complaint in Civil No. 76-1383. After oral argument, I indicated to counsel that I would reserve decision on whether to enforce or vacate the arbitration award. I also stated that my then present intention was to enforce the award and announced that a formal opinion would be filed on November 3, 1978.

I

 In April 1972, Falstaff purchased the right to brew beer under the Ballantine label. As part of this purchase, Falstaff took over Ballantine's retail customer lists and delivery routes, including 15,000 to 17,000 retail customer accounts. As a result of the purchase, the old Ballantine brewery in Newark, New Jersey was closed. After some deliveries from the warehouse in Newark, Falstaff established a retail distribution depot in North Bergen, New Jersey.

 When the North Bergen Depot opened in May 1972, some 240 members of either Local 153, International Brotherhood of Teamsters or Local 843, International Brotherhood of Teamsters were employed as warehousemen, route drivers or trailer drivers at the Depot. In November 1972, following a Teamster decision to award all of the work of the Depot to Local 153, a Collective Bargaining Agreement (hereinafter "CBA") was executed and made effective from June 1, 1973 and to terminate May 31, 1976.

 During the 28-month period from June 1973 until October 1975, the Depot employed approximately 140 Union members and serviced the North Jersey and Metropolitan New York, Staten Island and Western Long Island area. The work of the Depot involved deliveries from the North Bergen facility to the 15,000-17,000 retail customers which Falstaff acquired from Ballantine, and who were located in the above defined area. The deliveries were made with 33 retail delivery trucks in New York and 16 in New Jersey. One truck was used for each of Falstaff's 49 routes. Additionally, the work consisted of the warehousing for distribution to these customers of the Ballantine labeled product. This was the same work performed by the bargaining unit employees since the beginning of the Depot in 1972, and was similarly performed by these identical employees as prior employees of Ballantine at the distribution center located at the former Ballantine brewery in Newark.

 The Union filed the following grievance:

 
A dispute has arisen between the parties concerning the Company (Falstaff) contracting out of its delivery operations in violation of the various provisions of the Collective Bargaining Agreement.

 On October 17, 1975, arbitration was commenced. The initial hearing was held before Arbitrator Paul W. Hardy on February 27, 1976 under the Rules and Regulations for Arbitration of the New Jersey State Board of Mediation. At this hearing the parties entered into a submission agreement:

 
We the undersigned hereby agree to submit the following controversy to Arbitration: (No. persons involved 140)
 
Has the Company violated the applicable provisions of the collective bargaining agreement set forth on page 30 of the collective bargaining agreement? If so, what shall be the remedy?
 
We hereby agree to submit such controversy for decision to PAUL W. HARDY.
 
We further agree that we will faithfully abide by and perform any award made pursuant to this agreement and that such award shall be binding and conclusive upon us.

 This submission agreement was signed by counsel for the parties.

 The parties thereafter agreed to bifurcate the hearing and to first present evidence and argument relating to the issue of liability on February 27, 1976. On April 21, 1976, the arbitrator issued an "Opinion and Award" confined to the question of whether Falstaff had violated the pertinent provisions of the CBA as set forth in Article XVI at page 30. These provisions state:

 
ANTI-DISCRIMINATION.
 
Except as otherwise may be agreed upon between the Depot and the Union, the bargaining unit work shall continue to be performed by the employees in the bargaining unit except that the washing of vehicles may be sub-contracted to an independent agency.
 
The delivery of products coming within the Falstaff local retail delivery operation in North Bergen, New Jersey, shall be the jurisdiction of Local 153.
 
It shall be the Depot's policy to use available Depot equipment in preference to available outside equipment unless otherwise agreed upon by the Depot and the Union.

 The arbitrator ruled for the Union, finding that Falstaff had failed to abide by the provisions of the CBA.

 On July 16, 1976, Falstaff filed Civil No. 76-1383 in this court to vacate and set aside the arbitrator's "Opinion and Award". On September 2, 1976, this court stayed further proceedings in the action pending final conclusion of the continuing arbitration hearings. The case was "administratively terminated" on September 17, 1976, because of the ongoing arbitration. The termination Order was entered without prejudice to reopen at a later date.

 The arbitration hearings resumed in August 1976, at which time various issues relating to remedy were heard. On January 20, 1977, the arbitrator issued an "Interim Award" which held, Inter alia, that the CBA was still in effect and would remain so until May 31, 1977. Because of the finding that the CBA was extended for a year beyond the termination date set in Article XXII of the CBA, the arbitrator ordered that "the Company should cease and desist continuing to use distributors to distribute its Ballantine Falstaff labeled products in the New Jersey-New York metropolitan area previously serviced from its North Bergen depot." Interim Award, P 1. Falstaff never complied with the cease and desist order.

 The "Interim Award" further held that all employees laid off in October 1975 were entitled to monetary damages because they lost their employment due to Falstaff's violation of the CBA by converting to the use of independent distributors. Interim Award, P 2. The arbitrator determined the method of calculating damages, Interim Award, P 3, and made findings concerning health and welfare insurance coverage as well as pension credits due under the CBA. Interim Award, P 4. Finally, the arbitrator held that the "(interim) Award shall guide the parties in the computation of damages . . . ." Interim Award, P 5.

 After the filing of the "Interim Award", the arbitrator conducted hearings on the damages aspect of the case on various days from December 2, 1977 to April 18, 1978. On June 23, 1978, the arbitrator issued his "Final Opinion and Award" which reiterated the finding of the April 21, 1976 "Opinion and Award" that Falstaff violated the CBA, reaffirmed the contract extension finding of the "Interim Award", and fixed damages for back pay losses and loss of medical-insurance coverage suffered by the employees through May 31, 1977 in the amount of $ 1,560,189.31. The arbitrator further directed that Falstaff pay interest on that amount retroactive to June 1, 1977, at the rate of 7 1/2 % Per year (.625% Per month) and until payment of the damages is actually made to counsel for the Union. "Final Opinion and Award" at 15.

 The contractual provisions authorizing and limiting arbitration are contained in Article XI of the CBA:

 
A grievance within the meaning of the grievance procedure shall be defined as any difference between the Depot and the employees covered by this Agreement or between the Depot and the Union as to: (a) any matter relating to wages, hours of work or working conditions covered by this Agreement, and (b) any matter involving the interpretation, application or claimed violation of this Agreement.
 
STEP 4
 
The decision of the arbitrator which shall not be in violation of any applicable law or regulation shall be final and conclusive on the Depot, the Union, the Grievant and all employees. The arbitrator shall have no power to add to or subtract from or modify any of the terms of this Agreement or any Agreement made supplemental thereto.

 Falstaff submits that rulings of the arbitrator in the "Opinion and Award", the "Interim Award" and the "Final Opinion and Award" are either contrary to law or in excess of his authority under the CBA, the submission agreement, or both. As a result, Falstaff urges this court to vacate the arbitration award. At issue are damages of $ 1,560,189.31 to be paid to the Union plus interest at 7 1/2 % Per year until payment is actually made. To date, there has been no payment. The Union contends that the awards are within the law as well as within the arbitrator's authority, and should be enforced.

 Falstaff presents the following issues for determination by this court:

 
A. Does the Arbitrator's award fail to draw its essence from the collective bargaining agreement in that it directly obstructs the Company's Cranston, Rhode Island, operations which are not covered by that agreement?
 
B. Does the Arbitrator's interpretation and application of the collective bargaining agreement violate federal antitrust and labor law in that it prohibits the Company from doing business with independent distributors at its Cranston, Rhode Island, facility?

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