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AT&T INFORMATION SYS. v. LOCAL 13000 COMMUNS. WORK

May 15, 1985

AT&T INFORMATION SYSTEMS, INC.
v.
LOCAL 13000 COMMUNICATIONS WORKERS OF AMERICA, AFL-CIO



The opinion of the court was delivered by: FULLAM

FULLAM, J.

 In 1980, Bell of Pennsylvania entered into a collective bargaining agreement with the defendant union, which was then affiliated with the Telecommunications International Union ("TIU"). At that time, Bell of Pennsylvania owned and operated certain "telephone stores", which sold and installed "customer premises equipment"; employees represented by the defendant union were involved in that kind of work.

 In 1982, AT&T required Bell of Pennsylvania (its wholly owned subsidiary) to dispose of some of its "telephone stores" by conveying them to the plaintiff, a newly created, wholly owned subsidiary of AT&T. The transfer of assets was to be completed and effective as of January 1, 1983, the date when plaintiff commenced operations. At that time, however, no employees represented by the defendant union were transferred from Bell of Pennsylvania to the plaintiff, but it was understood that, eventually, at a later stage of the divestiture program, many of the Bell of Pennsylvania employees represented by the defendant would be transferred to plaintiff's employ. It was also understood by all concerned that, as of the date of complete divestiture, Bell of Pennsylvania would no longer be a wholly owned subsidiary of AT&T. The date of complete divestiture, and the date when the Bell employees represented by the defendant union were transferred to the plaintiff's employ, was in January 1984, approximately one year after the transfer of assets comprising the "telephone stores".

 In anticipation of these transactions, and many other similar transactions involving other subsidiaries and other parts of the country, AT&T, its operating subsidiaries, and the three international unions which represented the employees of these firms (TIU), the International Brotherhood of Electrical Workers ("IBEW") and Communications Workers of America ("CWA") negotiated agreements concerning the collective-bargaining consequences of the forthcoming re-shuffles. Identical memoranda of agreement were entered into with each of the three international unions by AT&T, for itself and on behalf of all of its subsidiaries and affiliates, in August 1980. These agreements were modified in 1982. By the time of the 1982 modifications, the defendant union was no longer affiliated with any of the three national unions which were signatories to the memoranda of understanding, and there was some uncertainty as to whether the defendant union and its members were protected thereby. Accordingly, it was deemed advisable to negotiate a similar "memorandum of understanding" between Bell of Pennsylvania and the defendant local union.

 It is clear that the overall purpose of the parties to these negotiations was to enable the defendant and its members to avail themselves of essentially the same protections provided by the national agreements. It is also clear, and undisputed, that the 1982 agreement which resulted from these negotiations was drafted entirely by Bell of Pennsylvania and AT&T, acting in concert. No drafts were submitted by the union, nor were any changes in wording suggested by the union.

 Paragraph 12 of the three national agreements provides:

 
"12. Each Bell System company will continue to be bound by the terms and conditions of [the specified collective bargaining agreement(s)] which is in existence at the time of any divestiture from AT&T. In addition, each wholly owned Bell System company agrees that the terms and conditions of such an agreement shall be fully binding on any successor organization to which employees covered hereby are transferred and that it will secure as a condition of any sale or other transfer of ownership of all or part of its business and physical assets, the assent of any successor organization that such agreement shall continue to effect and bind the successor organization." [Emphasis supplied]

 In the agreement with the defendant local, the underlined words "to which employees covered hereby are transferred" are omitted. (In addition, of course, the words "Bell of Pennsylvania" are substituted for "each Bell System company".)

 And the agreement with the defendant local union includes the following additional paragraph:

 
"13. Bell of Pennsylvania will seek to obtain concurrence in this memorandum of agreement by American Telephone & Telegraph Company (AT&T) to the extent that employees covered by this agreement who are transferred to an AT&T organization as herein defined or to a new subsidiary or affiliate entity of AT&T shall receive the same treatment from such AT&T organization, new subsidiary or affiliate entity of AT&T as if they transferred to a new subsidiary or affiliate of Bell of Pennsylvania pursuant to this agreement . . . ."

 The agreement with the defendant local union was submitted to the Executive Board of the defendant union, and was duly signed by the appropriate official, and dated as of June 2, 1982. In due course, under date of June 17, 1982, the appropriate official of AT&T expressed that company's "concurrence" as follows:

 
". . . American Telephone & Telegraph Company (AT&T) concurs in the Bell of Pennsylvania - FTWP memorandum of agreement to the extent that employees covered by that agreement who are transferred to an AT&T organization or new subsidiary or affiliate entity of AT&T as therein defined, shall receive the same treatment from such AT&T organization or new subsidiary or affiliate entity of AT&T as provided by the Bell of Pennsylvania -FTWP memorandum of agreement for employees transferred to a subsidiary or affiliate of Bell of Pennsylvania."

 A principal question now before the court is the applicability of the 1980 collective bargaining agreement between Bell of Pennsylvania and the defendant union to certain activities of the plaintiff which occurred in 1983, after Bell's telephone stores were transferred to plaintiff, but before the transfer of covered employees.

 I. PROCEDURAL BACKGROUND

 The 1980 collective bargaining agreement between Bell of Pennsylvania and the defendant union provided, in Article 17.01, that "the Company will maintain its established policies as to the assignment of work in connection with the installation and maintenance of communications facilities owned, maintained and operated by the company." The defendant local union contended that, in its operation of the telephone stores during 1983, plaintiff deviated from the customary work assignment policies, in violation of that provision of the collective bargaining agreement, and demanded arbitration of the disputes. The company thereupon filed this lawsuit, seeking a declaratory judgment that plaintiff was not bound by the collective bargaining agreement, and seeking an injunction against the scheduled arbitrations. On October 12, 1983, at the conclusion of a brief evidentiary hearing, I ruled from the bench that plaintiff was bound by the collective bargaining agreement, and was required to submit the disputes to arbitration pursuant to that agreement. The gist of my ruling was that para. 12 of the 1982 memorandum of understanding plainly obligated Bell of Pennsylvania to see to it that plaintiff, as the transferee of a significant part of Bell's business, agreed to be bound by the collective bargaining agreement; that, in the circumstances (in which AT&T, as the parent of both Bell of Pennsylvania and plaintiff, was in total control of the situation), plaintiff was chargeable with knowledge of Bell's obligation to obtain its assumption of the collective bargaining agreement; and that "equity regards as done that which ought to have been done".

 Plaintiff appealed my ruling to the Court of Appeals for the Third Circuit, but its application for a stay of my Order pending appeal was denied both by this court and by the Court of Appeals. Accordingly, while the appeal was pending, the parties were proceeding with the arbitration hearings.

 On June 6, 1984, the Court of Appeals, by divided vote, vacated my October 12, 1983 Order and remanded the case for further proceedings. *fn1" The panel majority ruled that plaintiff would be bound by the collective bargaining agreement only if (1) it was a "successor" within the meaning of para. 12 of the memorandum of understanding (but the court felt itself unable to review my ruling in that respect "without an adequate record and articulation of factual findings"); or (2) it were permissible to pierce the corporate veil, or apply some ...


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