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AVCO Corp. v. Local Union 787

decided: May 5, 1972.


Adams, C. J.

Author: Adams


The pivotal question presented by this case is whether a district court may decline to issue a "Boys Markets"*fn1 injunction solely because the compulsory arbitration feature of a "no-strike" collective bargaining agreement is "employee oriented."*fn2

The relevant facts underlying the controversy are not in dispute. On May 4, 1967, Avco Corporation (Avco) and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America and its Local No. 787 (jointly referred to as the Union) entered into a collective bargaining agreement which contained, inter alia, a "no-strike" clause*fn3 and a broad compulsory arbitration clause.*fn4 In essence, the compulsory arbitration clause provides (1) that a grievance is "defined as any alleged violation of the terms of this Agreement or differences of opinion as to its interpretation or application," (2) that "any individual employee or group of employees shall have the right to present grievances to the Company at any time", (3) that in the event grievances are unresolved by resort to the mechanisms set forth in the agreement, the Union may refer the matter to the American Arbitration Association, and (4) that "the decision of the arbitrator shall be final and binding upon the parties." Although the collective bargaining agreement regulated hours and wages, including overtime, it was silent whether Avco could require that employees work overtime, as defined therein.

The Avco plant in Williamsport, Pennsylvania, at the times in question, employed approximately 900 employees in the manufacture of aircraft engines. An additional 1500 employees had been laid off because of adverse economic conditions in the aerospace industry. Despite the lay-offs, the nature of the products manufactured in Williamsport was such that in order to maintain proper production flow, overtime work was often required.

On April 2nd and 3rd, 1970, three employees refused requests to work overtime, and in due course, were disciplined by Avco. When internal grievance procedures failed to resolve the issue whether such discipline was proper, the matter was referred to arbitration. The arbitrator declined to sustain the discipline applied to these individual employees "in principal part, because the company has condoned such refusals in the past." This decision was reached "reluctantly" by the arbitrator because of the "possibility that the Union may be encouraged to adopt a hard attitude that will preclude a solution to the problem."

On February 21, 1971, the Union passed a resolution to the effect that the members would refuse overtime work until such time as the laid-off employees were rehired. After the resolution was passed and the employees refused to accept further overtime, Avco sought an injunction in the state courts. The cause was removed by the Union to the district court, which, after a hearing, denied the injunctive relief on the ground that compulsory arbitration clause was "employee-oriented."*fn5


The first issue to be resolved is whether the district court erred in refusing to grant the injunction solely because the compulsory arbitration clause of the collective bargaining agreement was "employee-oriented". To decide this question, it is necessary to analyze Boys Markets and the cases leading up to it to determine whether such a criterion emerges from the reconciliation of federal labor policies.

Section 4 of the Norris-LaGuardia Act, 29 U.S.C. § 104 (1970), barred the federal courts from issuing anti-strike injunctions, and thereby established the federal policy of non-interference in such matters. That statute was a response to federal courts which used the mechanism of the anti-strike injunction to undermine union organizational and bargaining efforts.*fn6 However, an equally strong policy to encourage the settlement of labor disputes through enforcement of compulsory arbitration agreements evolved in the 1950's and coexisted with the anti-strike injunction prohibition.*fn7 In 1962, the Supreme Court undertook the resolution of the conflict created by these policies, but instead of reconciling them, the Court decided the question by adopting a literal reading of Section 4. Sinclair Refining Co. v. Atkinson, 370 U.S. 195, 8 L. Ed. 2d 440, 82 S. Ct. 1328 (1962). The effect of Sinclair was to hold that the earlier enacted Section 4 of the Norris-LaGuardia Act constituted an exception to Section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185 (1970), which vested jurisdiction in the district courts to entertain suits "for violation of contracts between an employer and a labor organization."

The Sinclair decision spawned a whole new set of conflicts between other policies. Prior to Sinclair, the Supreme Court had held that the purpose of Section 301 was to supplement the existing state jurisdictions over labor contract matters, and thus expand the number of available forums. Charles Dowd Box Co. v. Courtney, 368 U.S. 502, 7 L. Ed. 2d 483, 82 S. Ct. 519 (1962). The Court also announced a need for uniformity among state and federal courts with respect to the enforcement of labor contracts. Teamsters Local 174 v. Lucas Flour Co., 369 U.S. 95, 7 L. Ed. 2d 593, 82 S. Ct. 571 (1962). Thus, if the holding of Sinclair were limited to federal courts, uniformity would be destroyed, whereas if Sinclair were applied to state courts, state jurisdiction would be divested, contrary to the congressional intent behind Section 301.*fn8 The Supreme Court side -stepped this problem in Avco Corp. v. Aero Lodge 735, 390 U.S. 557, 20 L. Ed. 2d 126, 88 S. Ct. 1235 (1968), but that decision, holding that a state action to enjoin a strike in violation of a "no-strike" clause could be removed to the federal courts, effectively precluded state courts from enforcing such provisions.

Against this backdrop, the Supreme Court reconsidered Sinclair in Boys Markets. There, the Court, noting that Avco Corp. v. Aero Lodge ran counter to Section 301 and effected "a wholesale dislocation in the allocation of judicial business between the state and federal courts," 398 U.S. at 246-47, concluded that it could either extend Sinclair to the states or overrule it. Since Congress had not intended that the Norris-LaGuardia Act apply to the states, and because the holding of Sinclair as applied to the states would have "devastating implications" for the enforceability of collective bargaining agreements, 398 U.S. at 247, the Court chose to overrule Sinclair. Thus, it appears that the policy in favor of enforcing the settlement of labor disputes through compulsory arbitration emerged dominant. In explaining its deviation from the literal interpretation of the Norris-LaGuardia Act, the Supreme Court stated:

"The Sinclair decision, however, seriously undermined the effectiveness of the arbitration technique as a method peacefully to resolve industrial disputes without resort to strikes, lockouts, and similar devices. Clearly employers will be wary of assuming obligations to arbitrate specifically enforceable against them when no similarly efficacious remedy is available to enforce the concomitant undertaking of the union to refrain from striking. On the other hand, the central purpose of the Norris-LaGuardia Act to foster the growth and viability of labor organizations is hardly retarded -- if anything, this goal is advanced -- by a remedial device that merely enforces the obligation that the union freely undertook under a specifically enforceable agreement to submit disputes to arbitration. We conclude, therefore, that the unavailability of equitable relief in the arbitration context presents a serious impediment to the congressional policy favoring the voluntary establishment of a mechanism for the peaceful resolution of labor disputes, that the core purpose of the Norris-LaGuardia Act is not sacrificed by the limited use of equitable remedies to further this important policy, and consequently that the Norris-LaGuardia Act does not bar the granting of injunctive relief in the circumstances of the instant case." 398 U.S. at 252-253.

The Supreme Court specifically narrowed its holding to the situation where there existed a "no-strike" clause and where the strike was sought to be enjoined because it was over a grievance which ...

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