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SAFRAN v. USW

March 1, 1988

Lance L. Safran, Robert G. Schlachter, Anton J. Kotar, Carl Potenziani, Nicholas Hovan, Jr., Anthony G. Marinov, Paul A. Tague and Alfred A. Matteucci, Plaintiffs,
v.
United SteelWorkers of America, AFL-CIO and United States Steel Corporation and its successor, USX Corporation, Defendants



The opinion of the court was delivered by: COHILL

 COHILL, C.J.

 Presently before us is plaintiffs' Petition to Compel Arbitration. For the reasons set forth below, we will deny plaintiffs' motion.

 I. BACKGROUND

 Prior to being laid off in early 1984, the plaintiffs were all machinists in defendant USX's Valley Machine Shop in Homestead, Pennsylvania. While employed, the plaintiffs were all members of the defendant Union. In their Complaint, the plaintiffs allege that commencing in July, 1980, defendant USX contracted-out work in violation of the collective bargaining agreement between defendant USX and defendant Union. It is alleged that the contracting-out resulted in the plaintiffs being laid off. The plaintiffs contend that the lay-offs wrongfully foreclosed them from qualifying for certain early retirement benefits.

 The Petition to Compel Arbitration presently before us arises out of the plaintiffs' attempts to obtain relief through the grievance process provided for in the collective bargaining agreement. On May 22, 1984, the defendant Union filed a grievance with defendant USX on behalf of all employees affected by the contracting-out practices. Defendant USX denied the grievance and the matter proceeded to arbitration in March, 1986. In June, 1987, after a hearing had been conducted before the arbitrator but prior to a decision being rendered, the defendant Union withdrew the grievance from arbitration.

 The plaintiff's Complaint seeks relief against defendant Union on the grounds that it breached its duty of fair representation by withdrawing the grievance from arbitration. The plaintiffs demand relief from defendant USX on the grounds that it breached the collective bargaining agreement through its contracting-out practices. The plaintiffs also seek damages from both defendants pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001, et seq.

 II. DISCUSSION

 We note at the outset that we have jurisdiction over this hybrid cause of action under both the Labor Management Relations Act (LMRA), 29 U.S.C. § 185, and ERISA, 29 U.S.C. § 1132. Adams v. Gould, Inc., 739 F.2d 858, 865 (3rd Cir. 1984), cert. denied, 469 U.S. 1122, 83 L. Ed. 2d 799, 105 S. Ct. 806 (1985); Wilkes-Barre Pub. Co. v. Newspaper Guild of Wilkes-Barre, Local 120, 647 F.2d 372, 379-80 (3rd Cir. 1981), cert. denied, 454 U.S. 1143, 71 L. Ed. 2d 295, 102 S. Ct. 1003 (1982); Gavalik v. Continental Can Company, 812 F.2d 834, 846 (3rd Cir. 1987). The term "hybrid" is commonly used to refer to an action such as this wherein employees concurrently sue their union for breach of its duty of fair representation and sue their employer for breach of contract.

 Plaintiffs first argue that Section 4 of the Federal Arbitration Act provides a basis for an arbitration order from this Court. That section provides that "a party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition a federal court which would otherwise have jurisdiction over the parties, for an order compelling arbitration." 9 U.S.C. § 4.

 We note initially that it is uncertain whether the Arbitration Act is even applicable to labor-related cases. Section 1 of the Act defines "commerce" for purposes of the Act and provides that "nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. In a 1951 decision, the Third Circuit Court of Appeals held that Congress intended the language "nothing contained herein" to mean nothing contained in the Arbitration Act. Amalgamated Ass'n of Street, Electric Ry. and Motor Coach Employees of America, Local Division 1210 v. Pa. Greyhound Lines, Inc., 192 F.2d 310, 313 (1951). The court also held that the term "contracts of employment" included collective bargaining agreements. Id.

 However, two years later the Third Circuit Court of Appeals held that the exclusion included only those classes of workers "actually engaged in the movement of interstate or foreign commerce or in work so closely related thereto as to be in practical effect part of it." Tenney Engineering, Inc. v. United Elec. Radio & Machine Workers of America, Local 437, 207 F.2d 450, 452 (3rd Cir. 1953). It then held that the exclusion did not bar claims of employees engaged in the production of goods for subsequent sale in interstate commerce since the employees were not acting directly in the channels of commerce. Id. at 453.

 In a more recent case, the Third Circuit Court of Appeals noted in dictum that after the Supreme Court's landmark decisions advocating judicial deference to labor arbitration agreements, parties to such agreements have been able to enforce the terms of those agreements under Section 301 of the LMRA and therefore the Arbitration Act has been sparingly applied to labor arbitration matters. Service Employees International Union, Local 36 v. Office Center Services, Inc., 670 F.2d 404, 406 n.6 (3rd Cir. 1982). The court thus found it "a serious question as to whether the applicability of the Act to labor arbitration agreements retains any vitality in this circuit." Id. at 407 n.6. See also Amalgamated Cotton Garment & Allied Industries Fund v. J.B.C. Company of Madera, 608 F. Supp. 158, 163-64 (W.D. Pa. ...


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