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HAYES v. C. SCHMIDT & SONS

April 10, 1974

Gerald HAYES et al.
v.
C. SCHMIDT & SONS, INC.


Fogel, District Judge.


The opinion of the court was delivered by: FOGEL

FOGEL, District Judge.

Gerald Hayes, Robert Will and Andrew Dambach, as purported representatives of a class allegedly consisting of all employees of C. Schmidt & Sons, Inc. (hereinafter referred to as plaintiffs), seek to compel their employer (hereinafter referred to as Schmidt) to make contributions to a Profit Sharing Plan maintained by Schmidt for the benefit of its employees.

 The action was originally brought in the Court of Common Pleas of Philadelphia County during the August Term, 1973, Docket No. 1810. Schmidt removed the case to this Court pursuant to the provisions of 28 U.S.C. § 1441, invoking our original jurisdiction over the controversy under § 301(a) of the Labor Management Relations Act of 1947, 61 Stat. 156, 29 U.S.C. § 185(a). Plaintiffs did not contest the removal.

 Schmidt subsequently filed a motion to dismiss the complaint for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b) (6) of the Federal Rules of Civil Procedure.

 In an Order dated November 15, 1973, the Court, sua sponte, raised the question of federal subject matter jurisdiction, and directed that this issue, as well as Schmidt's motion to dismiss for failure to state a claim, be briefed and argued orally. Counsel thereafter submitted extensive memoranda pertinent to these issues.

 The relevant facts are not in dispute, and may be summarized as follows:

 For some years prior to 1972, Schmidt maintained a Profit Sharing Plan which provided for contribution by that company of a percentage of its profits for investment for the benefit of most, if not all of Schmidt's employees. *fn1" The Plan provided for amendment or discontinuance at any time by the company unilaterally, subject to the restriction that the corpus, in effect, was impressed with a trust for active and retired members. *fn2"

 In June, 1972, Schmidt entered into negotiations with Local 183 of the International Union of United Brewery, Flour, Cereal, Soft Drink and Distillery Workers of America, AFL-CIO, of which plaintiffs are members. The collective bargaining agreement which emerged from these negotiations contained the following provision with respect to the Profit Sharing Plan:

 
ARTICLE VI
 
* * *
 
SECTION 4. Profit Sharing
 
The participation of the employees in the C. Schmidt & Sons, Inc. Profit Sharing Plan shall terminate as of June 20, 1972. Employees shall be entitled to receive the amount of money standing in their account as of the market value adjustment at the time without regard to the vesting provisions of the plan. Each employee may express a preference as to the method in which such money shall be distributed or held for his account, provided however, the final decision with respect to such distribution shall remain with the Profit Sharing Committee.

 In support of its argument that this Court has jurisdiction over the subject matter of the action, Schmidt argues that plaintiffs' claim, if it exists at all, must arise from Article VI, Section 4 of the collective bargaining agreement, because all parties agree that in the absence of this provision, the company would have had the unilateral right to terminate the Plan at will, and plaintiffs would not have had any present claim to the funds in the Plan. Thus, Schmidt contends that the action falls within the purview of § 301, which confers exclusive jurisdiction upon the District Courts of the United States to hear "[suits] for violation of contracts between an employer and a labor ...


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