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LOCAL 773, INTL. BHD. OF TEAMSTERS v. COTTER & CO.

June 21, 1988

Local 773, International Brotherhood of Teamsters, Chauffeurs, Warehouseman, and Helpers of America
v.
Cotter & Company



The opinion of the court was delivered by: HUYETT

 DANIEL H. HUYETT, UNITED STATES DISTRICT JUDGE.

 Plaintiff Local 773, International Brotherhood of Teamsters, Chauffers, Warehouseman and Helpers of America ("Local 773" or the "union") brought suit to compel defendant Cotter & Company ("Cotter") to arbitrate a grievance regarding the layoff of its members employed by Mack Transportation Company ("Mack"). Local 773 contends that Cotter is a joint employer with Mack and, therefore, bound to arbitrate grievances pursuant to the collective bargaining agreement signed by Mack and Local 773.

 On January 8, 1987, defendant Cotter filed a motion to dismiss for lack of subject matter jurisdiction and for failure to state a claim arguing that Cotter cannot be compelled to arbitrate because it is not a joint employer with Mack and, therefore, is not bound by the bargaining agreement between Mack and Local 773. Because Cotter filed affidavits in support of its motion to dismiss, I deemed the motion to be one for summary judgment by order dated March 12, 1987. Plaintiff Local 773 filed a response to this motion and a cross-motion for summary judgment on April 15, 1987. *fn1"

 I held oral argument on these cross-motions on February 22, 1988. No material issue of fact exists regarding the issue of whether Cotter & Mack are joint employers. I will grant defendant Cotter's motion for summary judgment and deny plaintiff's for the reasons stated below.

 I. FACTS

 Mack's relationship with defendant Cotter is governed by a leasing agreement dated September 26, 1987 (the "leasing agreement"). (Exhibit A to Lynn affidavit). That agreement provided that Mack

 
will have sole control and responsibility for, and will be sole signatory under and connected with all labor negotiations, grievances, collective bargaining agreements, and related items concerning drives furnished to lessee [Cotter] under this agreement.

 (Leasing Agreement at para. 18). Mack's responsibilities under the leasing agreement also include the payment of drivers' wages and benefits; the withholding and payment of federal and state employment taxes for its drivers; the maintenance of its drivers' payroll records and workers' compensation insurance; and the compliance with all applicable state and federal laws relative to its drivers' employment. (Leasing Agreement at para. 4).

 According to the agreement, Cotter is responsible for "dispatch[ing], direct[ing] the loading and unloading of vehicles, select[ing] routes, direct[ing] drivers as to pickups, deliveries and other matters related to the day to day operation of the vehicles utilized by lessee [Cotter]." (Leasing Agreement at para. 9). Cotter's responsibilities also include obtaining and maintaining records to comply with ICC and DOT regulations, periodically checking drivers' logs to ensure their compliance with any applicable state and federal governmental regulations; insuring the trucks owned or leased by Cotter and driven by Mack employees; insuring the Mack employees while they are driving for Cotter; and indemnifying Mack for any payments that Mack has to make arising out of grievance settlements concerning Mack employees who drive for Cotter.

 The agreement reserves to Cotter the right to terminate the assignment of any driver if Cotter finds that

 
a) such driver conducts himself in such a way as to result in an increased premium on any insurance policy carried by Cotter, or b) such driver is not competent, or c) such driver is not or fails to continue to be duly licensed, or d) such driver's health is at any time less than required for the work involved.

 (Leasing Agreement at para. 3). In exchange for the drivers' services, Cotter agreed to pay Mack an amount equal to the drivers' wages, employment taxes, and employee benefit costs paid by Mack to the union. (Leasing Agreement Schedule A).

 The actual operation of the Cotter Allentown distribution center is consistent with the above described agreement. Mack conducted all interviewing and hiring of the drivers. (Halsey affidavit at para. 3). *fn3" Cotter dispensed Mack employment applications, but referred all such applications to Mack without comment.

 Mack also conducted all collective bargaining negotiations with Local 773. (Halsey affidavit at para. 5). Cotter had no authority to reject any collective bargaining agreement into which Mack and the union entered and did not participate in Mack's negotiations with the union. (Banus Transcript at p. 8-10; 15-16; 42-44). *fn4" However, according to Stephen Banus, Mack officials informed the union that Mack had to check with Cotter before agreeing to any collective bargaining terms. (Banus deposition at p. 15, lines 14-15; 44, lines 9-11).

 Cotter did express dissatisfaction with the results of Mack's collective bargaining efforts. (Defendant Cotter's reply to Local 773's motion for summary judgment at 3). For example, Cotter twice told Mack officials and Mack drivers that Cotter's driver costs were the highest in the area. (Halsey deposition at p. 37-38). However, these complaints were fruitless. The union twice refused to concede to Mack's requests pursuant to Cotter complaints for midterm contract negotiations: once in 1984 after Cotter representatives complained about labor costs (Banus deposition at p. 40, lines 13-41) and again in 1985 after Mack and Local 773 negotiated a three year contract dissatisfactory to Cotter. (Banus deposition at 43-46).

 Mack had exclusive authority to discipline its drivers, and issued all disciplinary notices. If a problem existed with drivers' logs or reports, Cotter forwarded the logs to Mack. (Halsey affidavit at para. 8). Mack also had exclusive authority to decide ...


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