March 26, 1974
WILLIE AIKENS, JOHN S. BARBERO, G. BRUCE BOSTICK, ANTHONY S. BUMBICO, MARGARET CROMWELL, ROBERT DAHNKE, JAMES DAVIS, PERRY DUKES, GEORGE R. EDWARDS, BRUCE ENTERLINE, JEFF ENTERLINE, MILTON L. ESKEW, JOHN HENEGHAN, VERA HENEGHAN, DONALD R. JORDAN, JOSEPH KRANZDORF, JOSEPH S. KUN, CARL KESSLER, ROBERT LEWIS, FRANK LITCH, WILLIAM LITCH, JR., EDWARD MANN, THOMAS MIEHL, JAMES W. MOORE, JAMES L. MOREY, EUGENE MOSER, S. MICHAEL OLSZANSKI, DENNIS PESKIN, MICHAEL A. POCHIRO, JR., ALICE PEURALA, ALFRED SAMTER, RUDY SCHNEIDER, MICHAEL SCHUCKE, GEORGE TROY, DAVID WOOD, Plaintiffs
I. W. ABEL, individually and as International President of United Steelworkers of America, AFL-CIO; WALTER J. BURKE, individually and as International Secretary-Treasurer of United Steelworkers of America, AFL-CIO; JOHN S. JOHNS, individually and as International Vice President of United Steelworkers of America, AFL-CIO; UNITED STEELWORKERS OF AMERICA, AFL-CIO; ALLEGHENY LUDLUM STEEL CORPORATION, ARMCO STEEL CORPORATION, BETHLEHEM STEEL CORPORATION, INLAND STEEL COMPANY, JONES & LAUGHLIN STEEL CORPORATION, NATIONAL STEEL CORPORATION, REPUBLIC STEEL CORPORATION, UNITED STATES STEEL CORPORATION, WHEELING-PITTSBURGH STEEL CORPORATION, YOUNGSTOWN SHEET & TUBE COMPANY, COORDINATING STEEL COMPANIES, Defendants JOHN S. BARBERO, ROBERT DAHNKE, JAMES DAVIS, PERRY DUKES, GEORGE R. EDWARDS, JOHN HENEGHAN, VERA HENEGHAN, DONALD R. JORDAN, JOSEPH KRANSDORF, ROBERT LEWIS, WILLIAM LITCH, JR., EDWARD MANN, EUGENE MOSER, MICHAEL S. OLSZANSKI, DENNIS PESKIN, ALICE PEURALA, ALFRED SAMTER, RUDY SCHNEIDER, GEORGE TROY, DAVID WOOD, Plaintiffs v. I. W. ABEL, individually and as International President of United Steelworkers of America, AFL-CIO; WALTER J. BURKE, individually and as International Secretary-Treasurer of United Steelworkers of America, AFL-CIO; JOHN S. JOHNS, individually and as International Vice President of United Steelworkers of America, AFL-CIO; UNITED STEELWORKERS OF AMERICA, AFL-CIO; ALLEGHENY LUDLUM STEEL CORPORATION, ARMCO STEEL CORPORATION, BETHLEHEM STEEL CORPORATION, INLAND STEEL COMPANY, JONES & LAUGHLIN STEEL CORPORATION, NATIONAL STEEL CORPORATION, REPUBLIC STEEL CORPORATION, UNITED STATES STEEL CORPORATION, WHEELING-PITTSBURGH STEEL CORPORATION, YOUNGSTOWN SHEET & TUBE COMPANY, COORDINATING STEEL COMPANIES, Defendants
Hubert I. Teitelbaum, District Judge.
The opinion of the court was delivered by: TEITELBAUM
In March of 1973, the defendant United Steelworkers of America (USWA) entered into an agreement with the ten defendant steel producing companies entitled the Experimental Negotiating Agreement (hereinafter ENA). In the terminology of contract law, the USWA, in return for certain enumerated benefits, gave up the right to strike and agreed to submit all issues unresolved in the bargaining process to final and binding arbitration by an impartial arbitration panel. In this consolidated action,
plaintiffs challenge the legality of the internal union process used in arriving at such an agreement. By implication perhaps plaintiffs' suit can also be said to attack the fundamental premise of the ENA itself -- the right and ability of a union to give up the right to strike. It is clear that plaintiffs' goal is to enjoin the setting in motion of the negotiating and arbitration mechanisms of the ENA until the agreement has been subjected to a referendum of the USWA's rank and file membership employed in the basic steel industry.
The ENA represents the culmination of several years of investigation and discussion on the part of both the steel companies and the USWA toward finding a new approach to conducting collective bargaining.
The last nationwide steel strike in this country took place in 1959. The strike lasted for 116 days until the "national emergency" it had created was enjoined under the Taft-Hartley Act. U.S. v. USWA, 271 F.2d 676 (3d Cir. 1959), aff'd, 361 U.S. 39, 80 S. Ct. 1, 4 L. Ed. 2d 12. Since then, the USWA and the steel companies have reached agreements on national contracts four times without the need for a strike. Nevertheless, the effects of the 1959 strike have been felt right up until the present day for that strike marked the beginning of the era of the boom-bust cycle, a pattern of triennial dislocation whose far-reaching effects have been felt by everyone involved in steel production and by the nation itself.
In the years since 1959, the customers of the steel industry have engaged in a cyclical pattern of stockpiling and hedge-buying. Usually within a year of the time that a national steel agreement is set to expire and negotiations toward a new agreement are set to begin, customers of the steel industry have begun stockpiling steel inventories, that is, increasing their purchases of steel in order to insure themselves of a sufficient supply on hand should a strike occur. In addition, steel customers have increasingly been forced to turn to foreign producers for their supplies and have often been induced to make long-term commitments to buy from those foreign companies.
This cyclical pattern of stockpiling and hedge-buying has had dramatic and severe effects upon the steel industry. The successful completion of steel industry negotiations has invariably resulted in an enormous drop in orders for steel, and consequently in an enormous drop in domestic steel production. The domestic steel companies, who paid overtime wages to meet production demands during the boom period, suffered decreased profits and losses as a result of the decrease in sales during the slack period. In the long run, the steel companies' sales have also decreased because the footholds gained by foreign producers in past years have become permanent inroads into the American market. All of this, of course, has an adverse effect upon the nation's economy and the nation's balance of payments. But when domestic steel production drops, the immediate and hardest-hit victims are the employees of the steel companies, members of the USWA. These employees bear the brunt of the layoffs, demotions and reduced work weeks which are the inevitable result of decreased production.
Not surprisingly, in light of the mutual detriment suffered by all parties as a result of the boom-bust cycle, all sides have searched for a new approach to collective bargaining which would have less disruptive consequences. In 1967 the major steel companies first proposed the idea of substituting binding arbitration for the right to strike to the USWA. In that year, the union's 28-member International Executive Board (IEB), made up of the USWA's three top officers, the National Director of Canada and the 24 District Directors, rejected the proposal. According to the testimony of I. W. Abel, president of the USWA, and Bernard Kleiman, the union's general counsel, the decision not to accept the proposal in 1967 was motivated by three considerations:
(1) NOVELTY: At the time the union had little or no experience with binding arbitration and no means of gauging its effect upon their goals and policies.
(2) SAFEGUARDS: The 1967 proposal contained no assurance that certain hard-won contract provisions, "sacred cows" in Mr. Kleiman's words, would not be subject to arbitration and thus subject to elimination in a neutral forum.
(3) BENEFITS: The 1967 proposal contained no provision for a special payment to employees symbolic of their share of the economic benefits which would accrue to the companies with the elimination of the boom-bust cycle.
It was at this point, upon rejection of the proposal, that the IEB issued on December 2, 1967 "an extensive clarification" of its position. The IEB Report was published in Steel Labor, the official journal of the USWA, a copy of which is sent to each union member's home. This statement, sent out under the imprimatur of the entire IEB, but drafted, as he testified, by Bernard Kleiman, was the subject of some controversy at the hearing in this case. That portion of the statement which was in dispute reads as follows:
"When this conditional proposal was brought before the International Executive Board, it was again stressed that no agreement of this type could possibly be reached, under any circumstances, without prior approval from all policy making bodies within our union, including the International Wage Policy Committee, the newly established Basic Steel Industry Conference of the local unions and a poll of the membership directly involved." (Emphasis added.)
This statement is of some symbolic importance, for plaintiffs contend that because defendants broke this "promise", a referendum must be conducted on the ENA. Defendant union's contention is that the statement is no more than an unenforceable statement of intention occasioned by the fact that the Steel Industry Conference (SIC), the ratifying body referred to in the quotation, was not yet operative or even in existence.
With the rejection of the proposal by the IEB in 1967, the USWA and the companies began negotiations toward a 1968 contract under the usual procedures. But as the strike deadline for those negotiations neared, unable to resolve the issue of which employee categories were to be covered by incentive wage provisions, the parties agreed to submit that question to binding arbitration in order to avert a nationwide strike. That submission of the issue of incentive coverage to binding arbitration in 1968 was significant in two respects. First, it provided an opportunity for both the companies and the union to gain experience in dealing with binding arbitration. As such, it was an important factor leading to the eventual adoption of the ENA.
The avowed reason for creating industry conferences in the basic steel, aluminum, can and nonferrous metal industries was to replace what had formerly been the function of the less representative Wage Policy Committee and, in the words of Resolution 24, to give the membership a more "meaningful role in deciding their own destiny". Toward that end, the 1968 agreement to submit the issue of incentive coverage to arbitration was put before the SIC, which approved the proposal in its representative capacity. The 1968 arbitration was never submitted to a ratification referendum of the USWA membership employed by the ten basic steel companies.
This then is the background leading up to the adoption of the ENA. In mid-1972, the steel company representatives again approached the officers and counsel of the USWA with the proposal that binding arbitration of all unresolved issues be substituted for the accept-our-position-or-accept-a-strike stance which had characterized previous steel industry negotiations. Discussion of the companies' proposal were carried on within what is called the Top Committee, four company officials authorized to speak for the ten largest steel companies in the United States, the ten companies named as defendants here, and five representatives of the USWA. During the preliminary discussions of what was to become the ENA, the steel company team was chaired by R. Heath Larry, vice chairman of the board of the United States Steel Corporation. The union side was headed by I. W. Abel and made up of the International vice president and secretary-treasurer, plus its general counsel and special counsel.
As had been customary since the inception of high level bargaining between representatives of the steel companies and the USWA in 1942, the subject matter of their deliberations, and indeed the fact that such deliberations were taking place, was not disclosed to the public.
By mid-March of 1973, the parties had reached an agreement in principle on the substance and detail of the ENA. On March 14, a meeting of the SIC was scheduled for March 28 and 29 in Pittsburgh, Pennsylvania. The local union presidents who were to attend were each sent a letter which informed them when and where the meeting would be held, but said nothing as to its proposed subject matter. On March 27, the IEB, the highest governing body within the union between conventions, approved a tentative draft
of the ENA. On March 29, after two days of debate, the SIC approved that draft of the agreement. Of the several hundred local union officers present at the SIC convention, seven voted against ratification. Prior to that ratification vote, a motion from the floor that the vote be postponed until the officers could consult with their membership was defeated.
Shortly thereafter, the Top Committee agreed upon a final draft of the language of the ENA. On April 16, 1973, the USWA sent to each of its members employed in the basic steel industry a letter which described the agreement and set out the thinking behind its adoption. On April 23, 1973, the ENA was formally signed by the parties.
The agreement's salient features include:
(1) A lump sum payment of $150.00 to each and every member of the USWA employed in basic steel, amounting to a cost of 50 million ...
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