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March 11, 1977

Jessop Steel Co., Plaintiff
United Steelworkers of America, Local 1141, and William A. Brooks, et al., Defendants

Marsh, D. J.

The opinion of the court was delivered by: MARSH

The plaintiff employer, Jessop Steel (Jessop) brought an action on June 3, 1976 against United Steelworkers of America (USW), Local Union No. 1141 (Local) and 13 individual employees of the Electric Furnace Department of Jessop in the Common Pleas Court of Washington County, Pennsylvania. The defendants removed the case to this court pursuant to 28 U.S.C. § 1441(b), asserting that this court would have had original jurisdiction pursuant to 29 U.S.C. § 185.

 The plaintiff Jessop seeks injunctive relief and damages.

 The trial on the merits was consolidated with a hearing on Jessop's motion for preliminary injunction on August 18 and 19, 1976. The defendants' motion to dismiss the action was denied. The defendants' motion to bifurcate the trial by postponing the damage portion until after the liability issues were decided was granted. Following a supplemental hearing on January 18, 1977, where the parties agreed to certain facts, the court denied Jessop's motion for a preliminary injunction.*It is the opinion of the court that a permanent injunction should be denied and judgment entered in favor of the defendants on the issue of damages.

 On August 1, 1974, Jessop entered into an Agreement (Plaintiff's Ex. 1) with the defendants wherein USW represented itself as the sole bargaining agent for the Local employees of Jessop including the 13 individual defendants employed in the Electric Furnace Department of Jessop's plant at Washington County, Pennsylvania. The Agreement expires October 1, 1977.

 Jessop employs about 900 employees in its plant and about 78 to 100 of these work in the Electric Furnace Department. All of them pay dues to USW.

 Plaintiff manufactures steel in its Washington plant. The steel is manufactured by means of three electric furnaces, which melt scrap metal. After the scrap metal has been melted by the electric furnaces, the molten metal is placed in an argon-oxygen vessel for further refining. The material from the argon vessel is poured into ingots and sent to other departments for further processing.

 For some period of time prior to September 1, 1975, employees performing direct production work in the Electric Furnace Department were provided with an incentive plan, which provided them earnings in excess of the standard hourly rate set forth in Appendix A of the labor agreement. These additional earnings accrued to employees for production of steel at a rate in excess of that expected from the standard hourly rate. See Appendix A-1.

 During the year 1975, Jessop modified the existing electric furnaces at the Washington plant so as to permit more steel to be melted therein. Plaintiff also purchased new cranes and ladles for its electric furnaces. The modifications were completed on or about August 31, 1975.

 The modifications in the electric furnaces increased the capacity of each electric furnace from approximately 29,000 to 30,000 pounds per heat to approximately 37,000 to 40,000 pounds per heat.

 Plaintiff then implemented the provisions of Section 9-H of the Agreement which permits a change in incentive plans upon the introduction of new equipment. The old incentive plan was cancelled on August 31, 1975. Pending institution of a new incentive plan, the employees were paid an interim rate specified in the Agreement at Section 9-H-1-d. On October 13, 1975, a new incentive plan was put into effect, but the new plan did not meet the approval of the Local including the 13 individual defendants who are the highest paid employees in the Electric Furnace Department. The employees engaged in a slowdown of production in the Electric Furnace Department in protest of the new incentive plan. The slowdown caused pecuniary damages to Jessop and loss of wages to the employees. The incentive level of production declined precipitously, but the standard hourly rate of production was substantially maintained. From October 13, 1975 to June 6, 1976, the operating performance in the Electric Furnace Department was 92.6%. *fn1" (Transcript of August 18-19, 1976; pp. 59-60.)

 On January 9, 1976, the Local filed a grievance (Plaintiff's Ex. 2) asking for revisions in the new incentive plan retroactive to the day of installation, i.e., October 13, 1975. The parties were unable to resolve the grievance and, on May 18, 1976, an arbitrator found that the new incentive plan maintained "the integrity of the previous incentive plan under Section 9-H of the Agreement," and therefore denied the grievance. (Plaintiff's Ex. 3.)

 The liability portion of the bifurcated trial ended August 19, 1976. The next day, August 20, 1976, a revised incentive plan was agreed to and adopted by Jessop, USW and the Local effective August 23, 1976, and that plan is currently in effect. (Transcript of January 18, 1977, p. 4.)

 The slowdown ended about August 29, 1976. (Id., p. 2.) All grievances relating to Jessop's actions in disciplining certain employees for taking part in a slowdown were withdrawn by the union as part of the understanding reached by Jessop, USW, the Local and the individual defendants on August 20, ...

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