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Local 719 v. National Biscuit Co.

decided: June 2, 1967.


Biggs, Hastie, and Forman, Circuit Judges.

Author: Forman


This is an appeal from an order of the United States District Court for the District of New Jersey granting the motion of the defendant below, National Biscuit Company ("Company"), for summary judgment against Local 719, American Bakery and Confectionery Workers of America, AFL-CIO ("Union"), dismissing the Union's action to declare void an arbitration award and granting the Company's counterclaim for confirmation of the award. This action was commenced by the Union in the Superior Court of New Jersey and removed to the District Court by reason of its jurisdiction under Section 301 of the Labor Management Relations Act*fn1 and 28 U.S.C. § 1331 and § 1337.

The undisputed facts derived from the pleadings, exhibits appended thereto, and the stipulation of the parties as to the completeness and accuracy of the transcript of hearings and related exhibits before the arbitrator show that the Company maintains a commercial bakery in Fair Lawn, New Jersey where the Union represents the bakery's 1500 employees, of whom about 80 are engaged in the shipping department. In the summer of 1964, the Company informed the Union that it intended to implement certain quantitative standards (called "reasonable expectancies") governing the output of work in the shipping department, which were developed on the basis of a study conducted by an outside consultant working with representatives of management. The authority invoked for such action was Section 1 of Article 28 of the collective bargaining agreement, providing as follows:

"Section 1. The Management of the business of the Company, the direction of its working forces, the schedules and quantities of production and the methods, processes and means of manufacturing, are prerogatives of the Management.

"It is understood that no provisions of this paragraph shall in any way interfere with or abrogate any rights conferred upon the Union or its members, by any other clause contained in this Agreement."

When the Union objected both to the standards and to the right of the Company to establish the same "unilaterally," the Company sought arbitration under Section 2 of Article 28 of the collective bargaining agreement, which provides:

"Section 2. In cases where changes in methods of manufacturing or increases in production are contemplated by the Management, the Company will submit such changes to the Business Representative and/or top official of the Local Union. Where the Union claims that any such change will result in more than a fair day's work for the employees involved, such change shall be submitted to a person designated by the top official of the parent body of the local union and to a person designated by the Management, in an effort to reach an agreement. Where both officials fail to reach an agreement, they shall choose a mutually satisfactory third (3rd) person as arbitrator of the dispute. His decision shall be final and binding on both parties."

The specific question submitted for arbitration was:

"Do the work schedules proposed by the company for the shipping department pursuant to Article 28 of the contract exceed a fair day's work for the time scheduled? If so, what schedules would be appropriate?"

Although the Union maintained that the dispute was inarbitrable, it consented to the designation of the arbitrator, who was selected from the roster of the Federal Mediation and Conciliation Service. At the first hearing before the arbitrator on the question of the arbitrability of the dispute, the Union agreed through its counsel "to appear before (him) with respect to the question of arbitrability," though not "in any sense to involve a waiver of any rights concerning arbitrability." After a hearing on this issue wherein the Union presented two witnesses, the arbitrator held that the dispute was within the contractual submission to arbitrate. Counsel for the Union expressed some fear at this time that if he thereafter participated on the merits of the dispute he would be deemed under the law to have prejudiced his rights to contest arbitrability. Nevertheless, four days of hearings on the merits were held with the Union participating, and thereafter the arbitrator rendered the award contested here, in which he held that some of the work expectancies did not exceed a "fair day's work"; that certain others were not supported by evidence adequate to permit decision; and that another was excessive and therefore decreased.

I -- Waiver of Arbitrability

While the Union contests the arbitrability of the dispute, it is the position of the Company that this court need not reach that issue for two related reasons: (1) that the Union had agreed to submit the issue of arbitral jurisdiction to the arbitrator and is therefore bound by his determination; and (2) that by participating on the merits of the dispute after the arbitrator's decision in favor of arbitrability, the Union forfeited its right to contest arbitral jurisdiction in a judicial forum.

The existence and extent of an obligation to settle disputes through arbitration is a contractual matter subject to judicial determination,*fn2 and any claim that the parties intended to exclude the courts from consideration of arbitrability must be borne by "a clear demonstration of that purpose."*fn3 Clearly at the inception of the arbitral hearings the Union acquiesced in the arbitrator's jurisdiction to decide whether the dispute was within the contractual submission -- essentially a jurisdictional question -- but with equal clarity the Union stated that its participation did not indicate a willingness in fact to forfeit judicial review of arbitrability. This fact distinguishes the present situation from Metal Product Workers Union, Local 1645 v. Torrington Co.,*fn4 cited by the Company, where both parties entered a written submission stating that a decision by the arbitrator that the matter is inarbitrable "will be issued as a final award," and the arbitrator so decided. Similarly, the Union's participation on the merits of the dispute cannot be held to constitute a ...

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