The opinion of the court was delivered by: KELLY
Defendant, Synthane Taylor Corporation (Synthane) has filed motions for summary judgment against the plaintiff, Amalgamated Clothing and Textile Workers Union of America, AFL-CIO, Local 1369 (Union). The Union filed suit
to vacate two arbitration awards which were entered in favor of the defendant. This dispute involves a plant closing which has idled approximately 150 union members. The Union has cross-moved for summary judgment against Synthane. The arbitration was necessitated by a difference in the interpretation of two provisions in the collective bargaining agreement (agreement) covering vacation benefits and severance pay. In addition, the plaintiff also alleges that defendant's failure to provide severance pay benefits violates the Pennsylvania Wage Payment and Collection law, 43 Pa. C.S.A. § 260.1 et seq.
The economic reasons for closing the Taylor plant are found in a fiscal report highlighting the financial results from 1978 to 1982. During that period the division's profitability, measured by operating income and return on investment, had decreased substantially each succeeding year. This downward trend had not gone unnoticed by the senior management of Alco Standard, the parent corporation of Synthane-Taylor.
In July, 1982, Frank Kelly, Group President of Alco Standard, proposed transferring the production of industrial laminates from the Taylor plant to the Synthane facility. All other operations at the Taylor division would be terminated.
In Mr. Kelly's report detailing the reasons for his decision he wrote:
The relocation is being proposed as the definitive resolution to a critical and probably chronic operating problem at the Taylor division . . . a problem whose magnitude is best exemplified by the $10 million of capital employed with a negative return . . . . the Taylor division has been marginally profitable since 1979 . . . . The major problems are: competitive pricing at below cost levels in copper clad laminates; a substantial amount of overhead unabsorbed by volume . . .; antiquated equipment; and high labor rates. Interim efforts at circumventing any of these elements have provided little hope for attaining any short or medium term turnaround.
Mr. Kelly concluded his report by stating only one product segment possessed the favorable market characteristics and profitability necessary to economically justify its continuation.
Synthane notified the Union in September, 1982 that its Valley Forge plant would be permanently closed. The greater part of the Union employees worked their last day on December 21, 1982. Eleven others finished up eight days later and a skeleton crew was retained until the plant was closed in March, 1983.
When the shutdown of the plant was announced, the Union cited provisions in their agreement which they interpreted provided for severance pay. The agreement read in part:
In case the Company permanently shuts down a department or section - Any employee or employees with (5) years or more of continual service who are laid off because of technological reasons, including, but not limited to changes in plant or equipment or changes in process operations which cause jobs to be abolished, will be given an opportunity for severance pay under the following conditions . . .
It was the Union's contention then, as it is now, that the shut down was due to technological reasons. Synthane vigorously disagreed with the Union's position and the dispute over the meaning of this provision was submitted to arbitration.
The Union predicated its case on a series of events preceding the plant closing. Synthane had transferred a number of its product lines to other plants. The machines and equipment used to produce these products were transferred also. During the years 1974-1980, the company had to deal with a number of environmental problems involving air and water pollution and sewerage disposal. The Union believed that the shut down was for "technological reasons" since it was based on environmental mandates, changes in plant and equipment and changes in the production process.
The arbitrator rejected this broad interpretation holding that the provision was not intended to cover "technological changes the company should have made to keep the plant in operation." (emphasis added).
The arbitrator was clearly influenced by the bargaining history surrounding the wording of the severance pay provision. During negotiations, the Union submitted a severance pay proposal to be included in the collective bargaining agreement. The Union's proposed clause would have provided benefits to any employee who was laid-off regardless of the reason, be it relocation, ...