Zady Natey, Incorporated v. United Food and Commercial Workers International Union, Local No. 27

995 F.2d 496, 143 L.R.R.M. (BNA) 2425, 1993 U.S. App. LEXIS 12898, 1993 WL 182443
CourtCourt of Appeals for the Fourth Circuit
DecidedJune 1, 1993
Docket92-1895
StatusPublished
Cited by7 cases

This text of 995 F.2d 496 (Zady Natey, Incorporated v. United Food and Commercial Workers International Union, Local No. 27) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Zady Natey, Incorporated v. United Food and Commercial Workers International Union, Local No. 27, 995 F.2d 496, 143 L.R.R.M. (BNA) 2425, 1993 U.S. App. LEXIS 12898, 1993 WL 182443 (4th Cir. 1993).

Opinions

OPINION

MURNAGHAN, Circuit Judge:

Zady Natey, Inc. challenges an order of the district court affirming an arbitration award in favor of the United Food and Commercial Workers International Union, Local 27. The arbitrator ruled that Zady Natey, as the seller of the assets of a business, Mash’s Inc.,1 was liable under an extant “successors [497]*497and assigns” clause2 in a collective bargaining agreement for damages caused by the failure of the purchaser to assume Zady Ña-teas obligations to its employees for the duration of the agreement. In granting the Union’s motion for summary judgment and entering an order enforcing the arbitrator’s award, the district court found that Zady Natey had certain obligations as a result of its agreement with the Union and that it had taken “affirmative steps, prior to the consummation of the sale and while it was still bound by the collective bargaining agreement, to make it impossible for the successors and assigns clause to be performed.” 826 F.Supp. 142. Zady Natey was deemed responsible to satisfy those obligations. Zady Natey has appealed.

Zady Natey has cast its appeal around a decision of the Supreme Court holding that, in the context of an issue over obligation to bargain, a purchaser of assets, though a successor or assign, was not responsible for substantive provisions of its predecessor’s collective bargaining agreement unless it also hired a majority of its predecessor’s employees. Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 107 S.Ct. 2225, 96 L.Ed.2d 22 (1987). We have here in the instant case, of course, a fact specific decision, dependent on what the parties (a seller and the Union) intended when the words “successors and assigns” were agreed upon and actually used in an agreement clearly in force. We must ask what duties attached to the seller as a result of entering such an agreement.

The arbitrator interpreted the successors and assigns clause as extending to the description of, though not the obligations of, the purchaser of Mash’s Inc.’s assets. Therefore, when the purchaser of Mash’s assets refused to be bound, the arbitrator found the term to cause liability on the part of Zady Natey (the changed name of Mash’s Inc.) which had by contract promised that successors and assigns would carry out the collective bargaining agreement terms. The collective bargaining agreement, from 1970 forward until expiration on December 21, 1987, a date about six months after the sale of Mash’s Inc.’s assets, uniformly contained language making it applicable to Mash’s Inc., its successors and assigns.

In the negotiations which brought about the sale, a stock purchase was considered, but ultimately, for tax reasons, the purchaser insisted on, and achieved, an assets purchase agreement. The purchaser refused to indemnify Mash’s Inc. for consequences of the sale concerning its employees and insisted on the .secrecy of the assets sale prior to closing. As a condition precedent to the closing of the sale, Mash’s Inc. agreed to cease operations, fire its employees, and change its name to Zady Natey, Inc. After closing, the new owners later reopened the facility and rehired a small number of Mash’s previous employees. Since not all of the terms of the collective bargaining agreement were adopted by or complied with by the purchaser of Mash’s assets, including its name, the Union representing the employees asserted a claim against Zady Natey. An arbitration ensued which the Union won.

The arbitrator specifically rejected Zady Ñateas view that only a successor as described in Fall River Dyeing, supra, could be a successor under the collective bargaining agreement. Zady Natey appealed to the district court for the District of Maryland.

Upon review of cross-motions for summary judgment, the district judge granted summary judgment in favor of the Union and against Zady Natey. It first determined that the arbitrator did not ignore the language of the collective bargaining agreement when he found that the purchaser of assets was a successor. The court further determined that Zady Natey took affirmative steps to frustrate the performance of the successors and assigns language.

The district court, in granting summary judgment in favor of the Union, determined that the arbitrator did not “ignore[ ] the plain language of the collective bargaining agreement in finding that new Mash’s [the purchaser of assets] is a ‘successor’ within the [498]*498meaning of the agreement even though it was not a ‘successor’ within the meaning of Fall River Dyeing.”

On appeal, we review the district court’s grant of summary judgment to the Union de novo. However, our review of the arbitrator’s decision is a very limited one. United Steelworkers of America v. American Mfg. Co., 363 U.S. 564, 568, 80 S.Ct. 1343, 1346-47, 4 L.Ed.2d 1403 (1960); United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596, 599, 80 S.Ct. 1358, 1360, 1362, 4 L.Ed.2d 1424 (1960) (“It is the arbitrator’s construction [of the collective bargaining agreement] which was bargained for; and so far as the arbitrator’s decision concerns [the] construction of the contract, the courts have no business overruling him because their interpretation is different from his.”).

The Supreme Court recently stressed the narrowness of that review in United Paper-workers International Union v. Misco, Inc., 484 U.S. 29, 38, 108 S.Ct. 364, 371, 98 L.Ed.2d 286 (1987):

The arbitrator may not ignore the plain language of the contract; but the parties having authorized the arbitrator to give meaning to the language of the agreement, a court should not reject an award on the ground that the arbitrator misread the contract.... [A]s long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced he committed serious error does not suffice to overturn his decision.

While the “arbitrator’s award can and should be overturned if the arbitrator exceeds his authority,” the “award is presumed to be legitimate as long as it draws its essence from the collective bargaining agreement.” Roy Stone Transfer Corp. v. Teamsters, Chauffeurs, etc. Local Union No. 22, 752 F.2d 949, 951 (4th Cir.1985) (emphasis added).

Zady Natey has contended that the arbitrator, in interpreting the successors and assigns clause, exceeded his authority because the term “successor” has a single meaning within labor law, as enunciated by the Supreme Court in Fall River Dyeing, supra, that meaning should have been imparted to the agreement it entered with the Union.

In Fall River Dyeing, the Supreme Court considered when a new employer, succeeding in another’s business, has an obligation to bargain with the union representing the predecessor’s employees.

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995 F.2d 496, 143 L.R.R.M. (BNA) 2425, 1993 U.S. App. LEXIS 12898, 1993 WL 182443, Counsel Stack Legal Research, https://law.counselstack.com/opinion/zady-natey-incorporated-v-united-food-and-commercial-workers-ca4-1993.