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BOWLES v. BIBERMAN BROS.

July 19, 1945

BOWLES, Administrator, Office of Price Administration,
v.
BIBERMAN BROTHERS, Inc.



The opinion of the court was delivered by: KALODNER

This action for injunctive relief and treble damages was brought by the Administrator of the Office of Price Administration pursuant to Sections 205(a) and 205(e) of the Emergency Price Control Act of 1942, 56 Stat. 23, as amended, 50 U.S.C.A.Appendix § 925(a) and (e).

It is alleged that the defendant, Biberman Brothers Inc., a dress manufacturer, has engaged in acts and practices which constitute a violation of Section 4(a) of that Act, 50 U.S.C.A.Appendix § 904(a), in that it has violated Maximum Price Regulation No. 287 (7 F.R. 10460), as amended and revised, *fn1" which establishes, inter alia, maximum prices for women's and misses' dresses sold by manufacturers other than at retail. The specific provision of the Regulation (hereinafter referred to as MPR 287) which is involved here is set out in the margin. *fn2"

 The cause came on to be heard by the Court without a jury, and, at the conclusion of the plaintiff's case, defendant moved to dismiss reserving the right to proceed in the event the motion is denied. Rule 41(b), Federal Rules of Civil Procedure, 28 U.S.C.A.following section 723c.

 The broad issue raised by the action is whether the defendant violated MPR 287. This question involves the construction of a written agreement entered into by and between the Philadelphia Waist and Dress Manufacturers' Association, of which defendant is a member, the International Ladies' Garment Workers' Union, and the Joint Board of Waist and Dressmakers' Union of Philadelphia.

 Asserting that the defendant overcharged on certain garments, plaintiff seeks injunctive relief as well as treble damages. The legal argument on the collateral issue relating to injunctive relief is, as I said in Bowles v. Katz, 61 F.Supp. 333, addressed to the exercise by the court of its discretion to grant or refuse the relief prayed for. The matter of damages, in this case, depends upon the construction of Section 10(b) of MPR 287, hereinafter referred to as Rule 2.

 The plaintiff's evidence and the stipulations of the parties disclose the following circumstances.

 For several years prior to June, 1943, the defendant, as a member of the Philadelphia Waist and Dress Manufacturers' Association, had been paying to its employees wage rates pursuant to a contract entered into by the Association and certain unions on September 12, 1940. In June, 1943, a dispute arose between the parties to the agreement regarding the right of the employees to a higher set of wage rates. Under the provisions of this agreement, *fn3" the dispute was referred to the Impartial Chairman for the Industry, who rendered a decision in writing on June 28, 1943. The Impartial Chairman held that because of a shift in the price lines of garments manufactured by the industry covered by the agreement, the employees were entitled to an additional amount of compensation for their work, and this amount was fixed at 8 1/2 per cent of the basic wage rates. Defendant thereafter paid its employees pursuant to the decision of the arbitrator, and considered the 8 1/2 per cent in its calculation of 'direct labor costs' under the provisions of Section 30(a)(10) of MPR 287, set out in footnote 2, thus passing it on to the ultimate consumer.

 The propriety of this action is strongly contested by the Administrator. He contends that the 8 1/2 per cent adjustment or increase may not be included as an item of 'direct labor costs,' on the grounds that (1) the contract under which the new rate was granted did not provide for an unconditional increase of a fixed amount or per cent, and (2) the arbitrator erred in his construction of Clause 44, which, it is asserted, does not provide for an increase on the ground on which the Impartial Chairman acted.

 The defendant is willing to admit that, if the 8 1/2 per cent wage adjustment or increase is not allowable as an item of 'direct labor costs', then it has violated the Regulation. It contends, however, that, as a matter of law plaintiff may not recover the damages he seeks because he cannot show the maximum selling price for the garments which are alleged to have been sold above the ceiling prices; therefore it contends, plaintiff may obtain, at most, an injunction, but it is asserted, plaintiff's evidence does not disclose facts which would warrant this Court in exercising its discretion to grant that relief.

 To my mind, a construction of Clause 44 here and now is unnecessary and inappropriate. The arbitrator's construction is, by the express terms of the contract, and by law, now a part of the contract itself. His construction is a final declaration as to the meaning of the Clause as intended by the parties to the agreement, which intention should control the process of interpretation by this Court.

 The immediate question, however, is not whether Clause 44 was construed correctly, but whether the increase granted by the Impartial Chairman may be considered as an item of 'direct labor costs' within the meaning of Section 30(a)(10) of MPR 287. Insofar as increases subsequent to March 31, 1942, are concerned, that Section sets up four conditions which must be satisfied in order that an increased wage rate be considered an item of direct cost: the increase must be made (1) pursuant to a collective bargaining contract or other wage agreement, (2) which was entered into on or before July 1, 1942, and which provides (3) for an unconditional increase (4) of a fixed amount or per cent.

 It is not disputed that the collective bargaining contract here in controversy was entered into before July 1, 1942. Moreover, I think there can be no doubt that the increase or adjustment was granted pursuant to a collective bargaining agreement -- whether it was granted rightly or wrongly by the arbitrator is irrelevant.

 Although the plaintiff asserts that the agreement does not provide for an increase unconditional in nature, his argument is, in truth, directed to whether or not Clause 44 embraces the ground on which the new rate was granted. However, as found by the Impartial Chairman, Clause 44 contemplates a change in wage rates coincident with a transfer of product or type of work during the life of the contract. Moreover, the clause makes it an obligation on the part of the defendants to pay, and on the part of its employees to accept, rates applicable to the product they now produce, which rates they would have been required to pay, and accept, had they produced such products, in the manner they now produce them, at the time the contract went into effect. In addition, he determined that the wage rates for the different price lines had been established for years in the industry. In my opinion, therefore, ...


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