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BAKERY DRIVERS & SALESMEN LOCAL 194 v. HARRISON BA

December 6, 1994

BAKERY DRIVERS AND SALESMEN LOCAL 194, IBT, Plaintiff,
v.
HARRISON BAKING GROUP, INC., a Delaware Corporation, A UNIT OF AMERIFOODS COMPANIES, INC., and DISTRIBUTION CONSULTANTS, INC., Defendants.



The opinion of the court was delivered by: LECHNER

 LECHNER, District Judge

 This is an action by Plaintiff Bakery Drivers and Salesmen Local 194, IBT (the "Union") against defendants Harrison Baking Group, Inc. ("Harrison"), a Unit of Amerifoods Companies, Inc. and Distribution Consultants, Inc. ("DCI") (collectively, the "Defendants"), seeking declaratory and injunctive relief pending the outcome of an arbitration proceeding concerning alleged breaches of a collective bargaining agreement and seeking an order directing expedited arbitration. See Verified Complaint, filed 29 November 1994 (the "Complaint"), and Exhibits A through D, P 1. Jurisdiction is alleged pursuant to 29 U.S.C. § 185(a). Complaint, P 2.

 On 29 November 1994, the Union filed an Order To Show Cause Seeking Temporary Restraints (the "Order To Show Cause"). The Defendants received notice of the Order To Show Cause approximately ninety minutes before counsel for the Union appeared in court; however, counsel for the Defendants did not receive a copy of the Order To Show Cause, the Complaint and the Moving Brief until he arrived at the courthouse. Accordingly, the Order To Show Cause was denied on 29 November 1994, without prejudice, to give the Defendants an opportunity to respond. A hearing on the Order To Show Cause was rescheduled for 2 December 1994.

 The Defendants were instructed to submit opposition by 4:00 o'clock p.m. on 1 December 1994. On 2 December 1994, at 8:00 o'clock a.m., a hearing on the Order To Show Cause (the "Hearing") was held. See transcript of the Hearing, dated 2 December 1994 (the "Hearing Tr."). At the conclusion of the Hearing, the parties were told that the inclination was to deny the relief requested, but that in light of the arguments and submissions their respective positions would be reconsidered over the weekend. Id. at 27.

 For the reasons set forth below, the Order To Show Cause seeking injunctive relief is denied; the Union's request for an order directing expedited arbitration is denied. *fn1"

 Facts

 A. The Parties

 The Union is an unincorporated labor organization and the exclusive collective bargaining representative for Harrison's driver-salesmen, drivers, over-the-road drivers, utility men and swingmen employed at the Harrison, New Jersey and Cinnaminson, New Jersey facilities of Harrison. Complaint, P 4.

 Harrison is a corporation, incorporated under the laws of the state of Delaware. Id., P 5. Harrison produces and sells baked products. Id. DCI is an agent and consultant of Harrison for the purposes of selling Harrison's delivery routes. Id., P 6.

 B. Background

 A collective bargaining agreement (the "CPA"), see Exhibit A to the Complaint, between the Union and Harrison, expired on 31 October 1994. Eversdyke Cert., P 4. Prior to 1 October 1994, Harrison made a business decision to divest itself of its distribution operations effective 1 November 1994. Id. According to Harrison, this decision "was based on economic necessity, a desire to raise capital, modernize the bakery and as a means to increase sales." Id.

 On or about 1 October 1994, Harrison announced its plan to divest the distribution portion of its business by offering to sell delivery routes to the bargaining unit drivers (the "Union Drivers"). Id., P 5; Complaint, P 12. Under Harrison's plan, Union Drivers who purchased routes would become independent distributors rather than employees. Complaint, P 12. According to the Union, the effect of such plan would be to eliminate the Union as of 1 November 1994, after the CBA expired. Id.

 Harrison contends there were initially about forty of the more than one hundred Union Drivers interested in purchasing their routes, but only eight did so by 22 October 1994. *fn2" Eversdyke Cert., P 8. On 27 October 1994, Harrison sent each Union Driver who had not purchased a route a letter (the "27 October Letter"), see Exhibit A to the Eversdyke Cert., summarizing the proposal. Eversdyke Cert., P 9. The 27 October Letter explained to Union Drivers that, among other things, under the proposal they could buy their routes at $ 40,000.00 less than fair market value, they could buy the truck at less than wholesale cost, they would get complete financing with no cash down payment required and Harrison would guarantee to buy the route back during the first year for any reason at the full purchase price. Exhibit A to the Eversdyke Cert.

 At the same time, Harrison advertised the sale of delivery routes to the general public. Eversdyke Cert., P 10. Forty-six third parties purchased delivery routes on or before 1 November 1994. Id.

 On or about 1 November 1994, Harrison terminated the Union Drivers. Id.; Complaint, P 12. The forty-six third party purchasers and the eight former Union Driver's who purchased their routes set out to distribute Harrison's products. Eversdyke Cert., P 11. The Union Drivers, who had not purchased routes, then picketed Harrison's facilities urging the public to boycott Harrison products and urging other Harrison employees not to work. Complaint, P 12. The Union, on behalf of the Union Drivers, sought to convince Harrison to cease efforts to sell the delivery routes and to continue to use Union Drivers to distribute its baked products. Id.

 At this time, the Union also filed a charge with the National Labor Relations Board (the "NLRB") alleging Harrison had failed to bargain in good faith over its decision to sell the existing delivery routes. Eversdyke Cert., P 12. On 9 November 1994, the NLRB determined (the "9 November NLRB Decision") see Exhibit B to the Eversdyke Cert., that Harrison had decided to sell the delivery routes for legitimate business reasons, that Harrison had no obligation to bargain with the Union and that its actions did not violate the National Labor Relations Act. Id.; Eversdyke Cert., P 13. As the 9 November NLRB Decision explained: "[Harrison's] decision involved a complete change in its existing distribution system resulting in a change in the scope and direction of [Harrison's] operation. Under these circumstances a bargaining obligation cannot be established. Exhibit P to the Eversdyke Cert.

 According to the Union, their efforts caused a substantial amount of loss to Harrison's business. Complaint, P 12. Harrison contends its losses from the Union's activities amounted to $ 700,000.00 to $ 800,000.00 per week. *fn3" Eversdyke Cert., P 14.

 On 11 November 1994, Harrison met with Union representatives in an effort to end the disruptions to its business. Id. Harrison offered to pay Union Drivers, who did not want to purchase their routes, $ 20,000.00 in severance money payable by 30 November 1994. Id. The Union rejected this proposal. Id. Harrison, believing the proposal was not accurately presented to Union Drivers, sent out a letter, dated 14 November 1994 (the "14 November Letter"), see Exhibit C to the Eversdyke Cert., explaining its terms. Eversdyke Cert., P 14. The 14 November Letter explained, among other things, that under the proposal "all [Union Drivers] . . . who do not purchase a route will receive a lump sum payment of $ 20,000.00 (less withholding taxes) by November 30, 1994. This offer is not contingent upon the sale of the routes." Exhibit C to the Eversdyke Cert. (emphasis in original).

 C. Collective Bargaining Agreements

 The Agreement, except as specifically provided, renewed the terms of the CBA. See Exhibit B to the Complaint, P 1.

 The CBA provides:

 
GRIEVANCE AND ARBITRATION PROCEDURE:
 
(A) The parties agree that they will promptly attempt to adjust all complaints, disputes or grievances arising between them involving questions of interpretation or application of any clause or matter covered by this contract, or any act or conduct or relation between the parties, hereto, directly or indirectly.

 Exhibit A, Art. XXII(A). Also, according to the CBA, if the parties are unable to resolve their disputes, "either party shall have the right to refer the matter to arbitration." Id., Art. XXII (B).

 An arbitrator from the American Arbitrator Association is authorized to resolve all such disputes. Id., Art. XXII(C). The decision of the arbitrator is binding upon both parties and the CBA "where applicable, shall constitute the basis upon which the decision shall be rendered. [Also] the arbitrator shall have no power to alter, amend, revoke or suspend any of the provisions of [the CBA]." Id., Art. XXII(D), (E). According to the CBA, the parties further agree that . . . arbitration, shall be the sole and exclusive remedy available to [Harrison] for the adjustment of any and all disputes between [Harrison] and the Union." Id., Art. XXII(G).

 The Agreement, which was supposed to resolve the dispute over the sale of delivery routes, provides:

 
Effective November 22, 1994, Harrison may maintain a maximum of fifteen independent distributor routes which it shall identify at that time. All other routes will be serviced by Harrison bargaining unit employees, and Harrison shall not subcontract the work of the drivers represented by the Union or sell their routes to independent distributors for the duration of this Agreement except as provided as follows: During the first six months of this agreement, Harrison may attempt to sell the routes only to bargaining unit drivers. In the event that such a member decides to purchase his route, he shall become an independent distributor and no longer a member of the bargaining unit. All routes that are independent or become independent, will remain independent and can be sold by the drivers or Harrison.

 Exhibit B to the Complaint, P 5

 D. Dispute Between the ...


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