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SMITH v. PITTSBURGH GAGE & SUPPLY CO.

February 24, 1971

Karl R. Smith, et al., Plaintiffs,
v.
Pittsburgh Gage and Supply Company, Defendant


Weis, D. J.


The opinion of the court was delivered by: WEIS

More than ten years have passed since the plaintiffs' employment with the defendant company was terminated in January of 1961. In attempts to prove that the discharges were in violation of a valid collective bargaining agreement, suit was commenced in the state courts of Pennsylvania; *fn1" charges were filed before the National Labor Relations Board; litigation was instituted in this District Court which resulted in a dismissal *fn2" and affirmance by the Court of Appeals; *fn3" followed by the commencement of this suit which also was dismissed *fn4" but was then remanded by the Court of Appeals "For a full hearing on the issue of the existence of the contract." *fn5"

 Pursuant to this instruction, the matter was tried to a jury which determined that a valid contract was in force between the Union, of which the plaintiffs were members, and the defendant and that the Company had wrongfully terminated the services of the plaintiffs in January of 1961. By stipulation of the parties, reached before the verdict was returned, it was agreed that if damages were to be awarded, the computation would be performed by a Master to be selected by the parties.

 Now before the Court are motions for judgment n. o. v. and for new trial filed by the defendant.

 Since the background of this case has been set out in more detail in the many reported opinions, only a brief outline of those operative facts which might have been found by the jury will be discussed here.

 For a number of years before 1959, the Steamfitters Local No. 449 and its predecessor union had entered into collective bargaining agreements of a one year duration with the Pittsburgh Gage & Supply Company. On June 1, 1959 a new contract purporting to be in effect until June 1, 1960 was signed by the Union and the employer.

 Pursuant to a provision in the contract, the Union notified the Company by letter of February 22, 1960 of its intention to terminate the agreement on April 30, 1960. Thereafter there were bargaining sessions between officers of the defendant Company and a committee of the Union, which included the Chief Business Agent of the Local and the shop steward, which resulted in the Company granting a "package" of 37 1/2 cents to be divided between wages, a major medical plan and a proposed pension. However, the terms of the proposed pension arrangement were not fully determined but were to await the results of an actuarial study. According to Hagmaier, the Chief Business Agent, the parties "shook hands" on an agreement which was to continue the working provisions of the 1959-60 contract, with the addition of the 37 1/2 cents package, until a new writing could be prepared embodying the as yet unformulated pension plan. In July of 1960, the Company did proceed to put the major medical plan into effect and the increased earnings, effective as of May 1, 1960, were paid to the employees.

 A memorandum dated July 20, 1960 was prepared by the defendant's Vice President, E.W. Olson, on Company stationery stating, "The working provisions of the 1959 agreement between Pittsburgh Gage & Supply Company and employees of Local Union No. 449 shall remain the same in the new May 1, 1960 to April 30, 1963 agreement. This letter will cover the general financial aspects of the agreement made between Pittsburgh Gage & Supply Company and its employees with Local Union 449 during the May 1, 1960 contract period." The document then lists the terms of the 37 1/2 cents "package." While the Company claimed that this writing was only an aide-memoire for Olson's private use, the plaintiffs asserted that it was given to the shop steward by the Vice President who suggested the addition of several handwritten stipulations relating to sick leave and holidays.

 On August 26, 1960 Olson sent a letter addressed to Karl Smith, the steward of 449, stating, inter alia, "In conformity with your request, we would like to assure you that it is our intention to live up to the basic provisions of the contract between Pittsburgh Gage & Supply Company and Local 449 which expired May 1, 1960. Naturally, there will be certain changes in the new contract which we feel sure are understood by your Union and by us, and these changes would be embodied in the new contract. We would like to feel we might work in an air of mutual trust and confidence in one another during the rather detailed studies which are being made with regard to pensions and which are presently holding up the signing of a new contract . . ."

 Four days later the "Pittsburgh Gage 449 Union Shop Committee" sent a memorandum to Mr. Olson stating, "This will officially notified you that on August 29, 1960 the members voted unanimously to accept your offer of July 20, 1960. The Union members agree with you to continue to work under the terms of the 1959 agreement between Pittsburgh Gage and Local Union No. 449 until a new agreement is signed. Very truly yours, Karl R. Smith, Earl Steward, Local 449 Shop Committee."

 On or about December 31, 1960 a contract proposal was submitted to the employees of Pittsburgh Gage containing provisions for a pension substantially less than the Union members had expected, but embodying all of the other items of wage increases, major medical plan, and sick leave and holidays which had been in effect for some months. The employees rejected the proposed contract, but continued to work.

 Thereafter, in the course of a letter dated January 21, 1961 and written to Smith, the Vice President of the Company said, "We are working under the provisions of the old contract until a new one is signed. We hope we can work in an air of mutual trust during our negotiations. If there are any further questions, please contact your Union officers."

 Nevertheless, when Smith protested his own and the other plaintiffs' "layoff" that same month as being in violation of the 1959-60 writing, the Company contended that there was no contract in force. Smith, however, filed a letter with the Business Agent of the Local asserting a grievance by reason of his layoff but the Union did not actively seek relief through arbitration nor did the plaintiffs insist upon it.

 Though the defendant continued to dispute the existence of an interim contract throughout the trial, the jury rejected the Company's point of view and found specifically that there was a valid agreement in effect which made the termination of plaintiffs' employment wrongful. These were questions of fact, not of law, *fn6" and there is ample support in the record to support the ...


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