Wood v. International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America, Local 406

807 F.2d 493, 124 L.R.R.M. (BNA) 2065
CourtCourt of Appeals for the Sixth Circuit
DecidedDecember 15, 1986
DocketNos. 85-1880, 85-1963 and 85-1964
StatusPublished
Cited by8 cases

This text of 807 F.2d 493 (Wood v. International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America, Local 406) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wood v. International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America, Local 406, 807 F.2d 493, 124 L.R.R.M. (BNA) 2065 (6th Cir. 1986).

Opinion

CORNELIA G. KENNEDY, Circuit Judge.

Petitioners-appellants Kroger Company (“Kroger”) and General Teamsters Union Local 406 (“the Union”) appeal from a jury verdict and various interlocutory orders entered by the District Court for the Western District of Michigan in an action brought by respondents-appellees, former employees of Kroger, (“plaintiffs”) under Section 301(a) of the Labor Management Relations Act. Plaintiffs appeal from the District Court decision granting the motion of defendant-appellee Hamady Brothers Food Markets (“Hamady”) to dismiss. The plaintiffs’ action before the District Court was based on three claims: 1) breach of the duty of fair representation by the Union; 2) breach of the collective bargaining agreement (“the contract”) by Kroger; and 3) successor liability of Hamady. For the reasons stated below, we affirm the District Court’s dismissal of Hamady and reverse the Court’s denial of Kroger’s and the Union’s motions for judgment notwithstanding the verdict.

I. FACTS AND PROCEEDINGS BELOW

Plaintiffs’ action arose out of Kroger’s lease/sale of one of its warehouses to Ha-mady. Plaintiffs, 38 former Kroger warehouse employees, only one of whom was hired by Hamady, were represented by the Union at the time of the transfer.1 The terms and conditions of their employment were controlled by a collective bargaining agreement between Kroger and the Union. Section 1.3 of the contract provided that “[tjhis Agreement shall be binding not only upon the parties hereto but upon their successors and assigns.” Collective Bargaining Agreement, Joint Appendix at 557. The agreement also established a grievance procedure, which was the exclusive mechanism for resolving disputes over the interpretation or application of the contract. The final, and binding, step of the procedure was arbitration. Id. at 564.

Kroger is an Ohio corporation, with operations in twenty-four states. In the spring of 1980, Kroger decided to sell its Michigan stores because they were not profitable. Arrangements were made to sell the stores to Hamady. On August 6, 1980, Hamady and Kroger entered into a separate agreement regarding the warehouse. The agreement provided that Kroger would lease the warehouse to Hamady for seven years, at the end of which time Hamady would purchase the warehouse. Kroger would also lease the equipment in the warehouse to Hamady for thirty-six months, with the provision that Hamady would purchase the equipment at the end of that period. Finally, Kroger and Hamady entered into a service agreement under which Hamady would provide Kroger stores with groceries and produce until October 4, 1980, with renewal options which could extend until January 3, 1981.

During the negotiations between Hama-dy and Kroger, Kroger representatives notified Hamady representatives of the collective bargaining agreement, and particularly of the successors and assigns clause. Mr. Hirsch, a Kroger representative, informed the Hamady representatives that the warehouse employees were a good group of people and that the dealings with the Union had been good. Joint Appendix at 824-25. A Union official testified that, in turn, Mr. Hirsch told the Union official that he did not think there would be a problem in terms of Hamady’s assumption of the con[496]*496tract. In a letter dated September 23, 1980, a Union official informed Kroger that if Hamady did not assume the contract, the Union would hold Kroger responsible for any damages to the employees.

At the time of the announcement of the lease/sale to Hamady, the Union met with Hamady officials to determine the effect of the transfer on the employees. There was some discussion of the seniority rights of the employees. In a meeting on September 15, 1980, Mr. Griffin, a Hamady official, stated in response to Union inquiries that Hamady intended to do its hiring exclusively from the Kroger employee roster. Ha-mady officials understood that Kroger was happy with its workforce at the warehouse. Mr. Griffin also told the Union that Hama-dy would make an effort to take seniority into consideration. At the same meeting, the Hamady officials informed the Union representatives that they would not accept the collective bargaining agreement. Id. at 379-80. In a letter dated September 22, 1980, the attorney for the Union acknowledged to the Union that Hamady was probably not bound by the Kroger contract. Joint Appendix at 861-62.

The sale of the warehouse was announced to the employees in a meeting held on August 7, 1980. On September 27, 1980, a second meeting was held in order to answer questions regarding the employees’ contract. At this meeting, Mr. Griffin, the Hamady official, informed the employees that Hamady would not adopt the contract and would not necessarily hire in order of seniority. Thereafter, the warehouse employees were interviewed and given physical examinations. Hamady posted the list of employees who would be hired. Hama-dy hired approximately half of the employees of the warehouse, but did not do so in order of seniority. On October 20, 1980, Kroger ceased operations at the warehouse and transferred the assets to Hamady.2

Hamady did recognize the Union as the exclusive bargaining agent for its new employees. After the meeting on September 27, Hamady officials engaged in bargaining with the Union. A new agreement governing the warehouse employees was reached on November 10 and ratified on November 22. The new collective bargaining agreement included many of the same provisions as the previous contract.

In early October, a former employee filed a grievance with the Union, claiming that Kroger and/or Hamady had violated the collective bargaining agreement. On that same day, the Union filed a grievance asserting that the agreement should be binding on Hamady and that Kroger had the obligation to see that Hamady assumed the contract. These grievances were denied at the Step 1 and Step 2 grievances. In addition to their request that the Union file a grievance, the employees requested that the Union seek an injunction against the transfer of the warehouse. Judge Hoffius of the Kent County, Michigan, Circuit Court initially entered a temporary restraining order, but the order was later dissolved.

The employees filed suit in the Kent County Circuit Court on October 16, 1980, claiming that: 1) the Union had breached its duty of fair representation, 2) Kroger had breached the collective bargaining agreement by failing to bind Hamady to the collective bargaining agreement, 3) Ha-mady was liable as a successor to Kroger, and 4) Hamady had discriminated against the employees on several different bases. The discrimination claims were severed and are not at issue here. Kroger and the Union removed the case to the District Court. When the representatives hearing the Step 3 grievance deadlocked, Kroger demanded a rehearing on this step of the grievance procedure. The Union, however, refused to participate because it contended that such a rehearing was not authorized. In February, 1981, the Union filed a motion to compel Kroger to arbitrate the grievances. The District Court ordered Kroger [497]*497and Hamady to arbitrate the issues. It also ordered that the interested employees be allowed to provide a spokesperson of their own to participate in the arbitration proceedings. The Court retained jurisdiction of the case pending completion of the arbitration process.

The arbitration hearing lasted four days. Plaintiffs were represented by their own attorneys, who participated fully in the hearing.

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807 F.2d 493, 124 L.R.R.M. (BNA) 2065, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wood-v-international-brotherhood-of-teamsters-chauffeurs-warehousemen-ca6-1986.