United States Gypsum Company v. United Steelworkers of America, Afl-Cio

384 F.2d 38
CourtCourt of Appeals for the Fifth Circuit
DecidedJanuary 15, 1968
Docket23918
StatusPublished
Cited by36 cases

This text of 384 F.2d 38 (United States Gypsum Company v. United Steelworkers of America, Afl-Cio) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States Gypsum Company v. United Steelworkers of America, Afl-Cio, 384 F.2d 38 (5th Cir. 1968).

Opinion

JOHN R. BROWN, Chief Judge:

The basic question in this case is whether the purchaser of assets of the predecessor employer can be compelled to arbitrate grievances under the collective bargaining contract between the employer and the union certified as the bargaining representative. Subsidiary, but perhaps more vexing, questions concern the Union’s right to assert the grievance, demand arbitration or secure arbitral relief with respect to , 'post-expiration periods, and both substantively and in point of time, with respect to post-decertification periods. In a § 301, 29 U.S.C.A. § 185, suit the District Court ordered arbitration. The Successor-purchaser appeals. We affirm.

The facts are neither complex nor conflicting. On April 1, 1965, the Successor 1 purchased all property and assets of the Employer 2 at its lime plant in Montevallo, Alabama, not including cash and accounts receivable. The sales purchase agreement undertook to exclude from the purchase the bargaining contract between Employer and Union. 3

This collective bargaining contract was for a term of three years, expiring March 30, 1967, two years subsequent to the asset acquisition by The Successor. The Union was not, of course, a party to the purchase contract. Indeed, actions of the Employer and The Successor reflected their judgment that the interest of the employees and the Union was none of their concern. 4 As though for all purposes — and certainly for labor relations —the enterprise was completely new and divorced from the prior operations, the Successor processed applications for employment and on April 5 hired all of Employer’s former employees (note 4 supra) except three. Except that the Successor did not check off union dues, determined seniority as of the date of employment with it, and by agreement installed a health insurance plan, the terms of employment were substantially the same as before the purchase. So too, was the physical operation — same work force, same plant, same process, same product (except for trade name), under the same supervisors.

In May, 1965, the Union, expressing “the desire * * * promptly to resolve the dispute about our contract, * * * so that the parties may continue to enjoy the collective bargaining relationship” existing since 1958, pursued the contract procedure including arbitration for settlement of grievances. 5 The Successor, refusing to arbitrate, commenced action before the National Labor Relations Board. After a few set backs, this ended *42 successfully in a formal decertification of the Union. 6

The Successor attacks the decree on a number of fronts. First, it denies that the predecessor contract is binding on it. Second, even if it is, then the contract cannot impose obligations as to the future, or in any event after decertification. And, third, whatever the decision on first and second, none of these grievances (note 5 supra) is substantively arbitrable.

I

When all is said and done the Successor’s attack on the binding force of the contract is a frontal, massive assault on Wiley 7 For while a diversionary thrust is made on the factual distinction that this is an asset acquisition, not a consensual merger, the Successor cannot escape from the Court’s expressed unwillingness to cast its decision in terms of title, property or corporate niceties.

“This Court has in the past recognized the central role of arbitration in effectuating national labor policy. * * * It would derogate from ‘the federal policy of settling labor disputes by arbitration’ * * * if a change in the corporate structure or ownership of a business enterprise had the automatic consequence of removing a duty to arbitrate previously established; this is so as much in cases like the present, where the contracting employer disappears into another by merger, as in those in which one owner replaces another but the business entity remains the same.” 376 U.S. at 549, 84 S.Ct. at 914. The important thing to the Court was the “substantial continuity of identity in the business enterprise before and after a change”, 376 U.S. 543, 551, 84 S.Ct. 909, 915. The Court very frankly recognized that it was not dealing with traditional notions of contract law, assumption by successors, or the like.

“The preference of national labor policy for arbitration as a substitute for tests of strength between contending forces could be overcome only if other considerations compellingly so demanded. We find none. While the principles of law governing ordinary contracts would not bind to a contract an unconsenting successor to a contracting party, a collective bargaining agreement is not an ordinary contract. * * * Therefore, although the duty to arbitrate * * * must be founded on a contract, the impressive policy considerations favoring arbitration are not wholly overborne by the fact that Wiley did not sign the contract being construed.” 376 U.S. at 550, 84 S.Ct. at 914. This is, of course, entirely in keeping with the trilogy 8 opinions which cast the problem in terms of effective labor relations using the collective bargaining-compact as a sort of “common law” of the shop, Warrior & Gulf, supra, 363 U.S. 574, 578-579, 80 S. Ct. 1347, not a bond to be read and applied by judges under the usual contract principles.

The Successor’s complaint is the bald one that Wiley and those cases specif ical *43 ly applying it to asset acquisitions 9 are simply wrong.

We may grant that the assault is well constructed and formidable, resting primarily on the assertion that from deficiencies in advocacy, the Court was either led or pushed into error. The main thread has two strands. The first is that Wiley failed to reckon with the deeply ingrained, deliberate Congressional policy against compulsory arbitration which is brought forward as a part of the LMRA. 10 The second is that through ineptness of the adversaries or self interest of the successor the Court had pressed on it the “continuity of identity” 11 test presumably in the hopes that factually the Court would find it not to have been satisfied. Out of self interest of a litigant this was to introduce a beguiling, though erroneous, concept. This, the argument runs, is so because it fails to reckon with the distinction between a successor employer’s (a) duty to recognize and bargain with the collective bargaining representative of the predecessor employer, 12 and (b) the scope of such successors obligation actually to reach a contract. 13

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Bluebook (online)
384 F.2d 38, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-gypsum-company-v-united-steelworkers-of-america-afl-cio-ca5-1968.