The opinion of the court was delivered by: STERN
The Singer Company has announced its intention to close its sewing machine manufacturing facility in Elizabeth, New Jersey by the end of 1982. The company's employees now sue to compel Singer to keep the plant open. Plaintiffs contend that in exchange for millions of dollars in union "give-backs," the company agreed to keep the Elizabeth facility open for the length of the agreement by investing $ 2 million to restructure the plant and by using best efforts to keep the plant open, at least in part by securing defense contract work to supplement the manufacturer of sewing machines. Plaintiffs claim that Singer has neither spent the $ 2 million nor used best efforts to secure defense work. Plaintiffs bring this action pursuant to section 301 of the National Labor Relations Act, 29 U.S.C. § 185, alleging that Singer has thereby breached its collective bargaining agreement with Local 461 of the International Union of Electrical, Radio and Machine Workers, AFL-CIO ("Local 461"). Plaintiffs, seeking specific performance of the agreement, ask the Court to enter a preliminary and permanent injunction restraining defendant from taking any steps to close the Elizabeth facility during the term of the contract or, at least, until Singer fulfills its contractual obligations. In addition, plaintiffs seek damages for defendant's alleged breach.
It is Singer's contention that the collective bargaining agreement imposes no obligation on the company to stay in business. Singer argues that while it was obligated to spend $ 2 million to restructure the Elizabeth plant to make it more efficient, it at no time surrendered what it characterizes as the prerogative of any company to go out of business when it so desires. Singer argues, in addition, that although it has admittedly breached its contract by failing to spend the $ 2 million, it should be excused from the payment of any damages because performance under the contract became impracticable by November 1981, less than five months after it was signed, due to an unexpected and severe decline in market demand. In other words, Singer wishes to close this plant and walk away from the situation, without incurring any damages, despite the fact that it has operated the Elizabeth plant since May 1981 with the benefit of substantial union "give-backs" that were extracted on the basis of promises which have now been breached.
The Court finds that the agreement, which is clear and unambiguous, contains no promise that Singer will refrain from discontinuing operations in Elizabeth. Therefore the Court will not enter an injunction restraining defendant from closing the plant if it chooses to do so. On the other hand, the Court finds that within a few short months after the agreement had been signed, and after having extracted substantial "give-backs" from its employees, Singer breached a clearcut obligation both to spend $ 2 million to restructure the plant and to use its best efforts to secure defense contracts and otherwise maintain the facility as a viable economic entity. Accordingly, although the Court will not compel Singer to stay in business, we will not permit a company in clear breach of its collective bargaining agreement to escape its responsibility to answer in damages. Instead, the Court will award plaintiffs monetary damages in an amount to be measured either by the value of the union "give-backs," which will be determined at trial, or by the $ 2 million Singer promised, but failed, to spend, whichever is greater.
The plaintiffs in this action are Local 461, the collective bargaining representative for the workers employed by defendant Singer at the Elizabeth facility; District III of the International Union of Electrical, Radio and Machine Workers, a regional organization representing union members in the New Jersey-New York area including those workers who are members of Local 461; several named officers and members of Local 461; and New Jersey State Assemblyman Raymond Lesniak, who represents the district in which the Singer plant is located.
Defendant Singer's Elizabeth facility, which occupies some 1.4 million square feet, houses industrial sewing machine and sewing machine parts manufacturing operations and offices for various marketing and miscellaneous administrative activities. Singer has maintained operations in Elizabeth since 1877 and Local 461 has represented the Singer employees at this location since 1949. At its peak, the facility employed approximately 10,000 employees. According to defendant, as recently as 1973 about 300,000 industrial and consumer sewing machines were produced at Elizabeth, of which 24,000 were industrial. At that time, the plant employed 3,500 employees. By January 1980, due to decreased consumer demand, increased competition, particularly from foreign sources, and the transfer of a percentage of Singer's manufacturing activities overseas, the Elizabeth workforce had been reduced by more than half to 1,530 employees. Later that year, the company announced that it was discontinuing the manufacture of consumer products at Elizabeth. Since that announcement, the number of employees at the plant, now devoted exclusively to the manufacture of industrial machines, has steadily declined.
With all sides recognizing that the viability of the plant was in jeopardy, the parties entered negotiations in the spring of 1981 aimed at reaching a new collective bargaining agreement. On June 21, 1981, after having extended the deadline on contract talks by mutual consent, the company and Local 461 entered into a Memorandum of Agreement modifying and extending the previous collective bargaining agreement between the parties. That contract, which is the subject of this lawsuit, was effective May 10, 1981 and expires on May 14, 1984.
According to Singer, when the negotiations commenced, the bargaining unit consisted of 721 employees. By May 9, 1981, the expiration date of the old agreement, that number had shrunk to 673, and by June 21, 1981, the date the new contract was agreed upon, it had shrunk still further to 598. The company claims that, as of the date of this decision, what was at its peak a workforce of over 10,000 has shriveled to about 400.
The June 21st Memorandum of Agreement included the following clause, Appendix Z, upon which plaintiffs' claims are primarily based:
During the negotiations which led to this agreement it was mutually recognized that every effort should be made by both the Company and the Union to improve the productivity of the plant.
Accordingly, the Company will invest two million dollars ($ 2,000,000) in restructuring the facility to make more efficient the production facilities for the manufacture of industrial sewing machines. The Company will within 30 days initiate the necessary procedures to implement the restructuring plan.
In addition, the Company will continue to devote emphasized attention to the procurement of defense work compatible with the plant's machine shop capabilities and has the potential for profitability. Such work would be incremental to the Company's principal mission which is to produce a competitive sewing machine. In this connection, Secretary of Defense Weinberger stated that he and the Defense Department will do everything in their power within the limits of the law to assist The Singer Company in securing such Federal work for the Elizabeth plant.
Plaintiffs contend that in order to extract the commitments on the part of the company contained in Appendix Z, the union was forced to agree to certain "give-backs." There is a factual dispute as to which concessions agreed to by the union should be considered "give-backs" and as to how the "give-backs" should be valued. Both sides agree, however, that at a minimum the "give-backs" include: the elimination of two floating paid holidays per year; the elimination of two ten-minute rest periods per day; a decrease from ten to seven in the number of hours paid for by the company that shop stewards could devote to union business; and certain changes in incentive standards to reduce production costs and increase productivity. The Singer Company prepared a document at the conclusion of the negotiations in which it estimated the value of these ...