On certification to the Superior Court, Appellate Division.
For affirmance as modified -- Chief Justice Wilentz and Justices Pashman, Clifford, Schreiber, Handler and Pollock. Concurring in part and dissenting in part -- Justice O'Hern. The opinion of the Court was delivered by Handler, J. O'Hern, J., concurring in part, dissenting in part.
[90 NJ Page 459] This case presents the question whether a nonsignatory party to a collective bargaining agreement is subject to the binding arbitration provisions of that agreement as the alter ego of the signatory party. More specifically, we must determine whether an arbitrator had the authority to decide whether there was such an identity between the signatory and nonsignatory parties
as to bind the latter to an arbitration award under the agreement.
Universal Utility, Inc. (hereinafter "Universal") is a party to a collective bargaining agreement with Laborers Local Unions 472 and 172. Pursuant to Articles 15, 16 and 17 of this agreement, Universal must pay contributions to the unions' Welfare Fund, Pension Fund, and Safety Education and Training Fund. These contributions are used to provide certain medical and pension benefits to covered employees.
In 1978, a dispute arose regarding the payment of these contributions.*fn1 Specifically, the unions alleged that Universal was using various alter ego corporations to perform work subject to the collective bargaining agreement, thereby evading Universal's pension and welfare fund obligations under that agreement.
After informal efforts to resolve the dispute were unsuccessful, the matter was sent to arbitration. At a hearing scheduled on July 26, 1979, both the unions and the funds were represented by counsel, but no one appeared for either Universal or its alleged alter ego corporations, Cardell Enterprises and Cardell Construction Company (hereinafter "Cardell").*fn2
The arbitrator found that Universal and the Cardell companies were, in fact, the same business enterprise. In reaching this conclusion, he noted that all three companies were located at the same address, that all had the same telephone numbers, and that two secretaries answer the telephone "Cardell" but when asked for Universal, each responds that it is the same company.*fn3 He further found that Universal had concealed the use of its employees through its creation of alter ego corporations, and that it had been conducting its business and using employees entitled to the benefits of the funds in such a manner as to circumvent its obligations under the collective bargaining agreement. On the basis of these findings, the arbitrator ruled that the trustees of the funds were to audit the payroll and other records of Universal and its alter ego corporations in order to determine the amount of contributions owed by Universal to the various funds. Jurisdiction was retained.
The unions and funds later filed a complaint, seeking to confirm the arbitrator's awards, pursuant to N.J.S.A. 2A:24-7.*fn4 The complaint alleged that the court had jurisdiction both under the New Jersey statute governing arbitration and awards, N.J.S.A.
2A:24-1 et seq., and under 29 U.S.C. § 185(a), more commonly known as § 301 of the federal Labor Management Relations Act. Further, it alleged that the defendants, Universal and the two alleged alter ego corporations, had refused to comply either with their contractual obligations or the arbitrator's awards. Universal answered the complaint by admitting the court's jurisdiction under N.J.S.A. 2A:24-7 but denying it under the Labor Management Relations Act. Universal further contended that it was no longer an operating company and, therefore, no longer subject to the collective bargaining agreement; that it made all due contributions to the funds, with the exception of the amount awarded in the first arbitration; and that that amount had been tendered but not accepted. Finally, Universal contended that it could not be bound by the second arbitrator's award because he was without jurisdiction to hear the matter. The Cardell defendants responded by denying the arbitrators' jurisdiction and adding that, as to them, the second set of arbitration hearings lacked due process.
After a hearing at which all the parties were represented, the Chancery Division confirmed both arbitration awards. On appeal, the Appellate Division reversed, holding that, in the absence of proof of the existence of a collective bargaining agreement to which the alleged alter ego corporations were a party and signatory, and without proof of any party's consent, in the contract or otherwise, to submit to arbitration the issue of the unity of identity among the parties, the arbitrator was without authority to hear or determine such questions. Accordingly, it vacated and set aside those portions of the Chancery Division's order that confirmed the second arbitrator's award and directed enforcement thereof, and that directed the payment of all auditing fees, as well as the payment of the sum of $500.00 to the arbitrator. We granted the unions' petition for certification. 88 N.J. 492 (1981).
We now affirm the Appellate Division to the extent that it held the arbitrator had no jurisdiction to determine the question whether any party, other ...