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November 6, 1992

LUDEN'S, INC. Plaintiff,

The opinion of the court was delivered by: BY THE COURT; FRANKLIN S. VAN ANTWERPEN


 November 6, 1992


 Plaintiff, Luden's, Inc. (Luden's), commenced this action on March 16, 1992 against Defendant, Local Union No. 6 of the Bakery, Confectionery and Tobacco Workers International Union of America (the Union) and the American Arbitration Association (AAA), seeking a declaratory judgment as to the arbitrability of a dispute arising between Luden's and the Union over the retroactivity of wages negotiated between the parties on November 1, 1991. Luden's also seeks to enjoin an arbitration proceeding which is currently scheduled to resolve this dispute. Presently before the Court are the parties' cross-motions for summary judgment filed on August 14, 1992.

 We have carefully reviewed the cross-motions, the stipulated facts and attached exhibits, as well as the memoranda of law submitted by the parties. *fn1" For the reasons stated below, plaintiff's motion for summary judgment is granted, and defendant's cross-motion for summary judgment dismissing plaintiff's complaint and requesting an Order directing plaintiff to proceed with the scheduled arbitration, is denied.


 The court shall render summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). An issue is "genuine" only if there is a sufficient evidentiary basis on which a reasonable jury could find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202 (1986). A factual dispute is "material" only if it might affect the outcome of the suit under governing law. Id. at 248, 106 S. Ct. at 2510. All inferences must be drawn and all doubts resolved in favor of the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S. Ct. 993, 994, 8 L. Ed. 2d 176 (1962); Gans v. Mundy, 762 F.2d 338, 341 (3d Cir.), cert. denied, 474 U.S. 1010, 106 S. Ct. 537, 88 L. Ed. 2d 467 (1985).

 On motion for summary judgment, the moving party bears the initial burden of identifying for the court those portions of the record that it believes demonstrate the absence of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). To defeat summary judgment, the non-moving party must respond with facts of record that contradict the facts identified by the movant and may not rest on mere denials. Id. at 321 n.3, 106 S. Ct. at 2552 n.3 (quoting Fed. R. Civ. P. 56(e)); see First Nat'l Bank of Pa. v. Lincoln Nat'l Life Ins. Co., 824 F.2d 277, 282 (3d Cir. 1987). The non-moving party must demonstrate the existence of evidence that would support a jury finding in its favor. See Anderson, 477 U.S. at 248-49, 106 S. Ct. at 2510-11.


 The parties have stipulated to the following facts out of which this dispute arises.

 On May 1, 1988, Luden's and the Union executed a collective-bargaining agreement (1988 CBA or Agreement) setting forth the terms and conditions of employment at Luden's Reading, Pennsylvania plant. (Stipulation of Facts, P1). The 1988 CBA sets forth a five step procedure by which employees can seek resolution of grievances arising from their employment. *fn2" The 1988 CBA also sets forth the duration of the Agreement. *fn3"

 On February 14, 1991, the Union, by its President, Joseph Rauscher, sent a letter to Donald B. Watson, Plant Manager of Luden's, enclosing a Notice to Mediation Agencies. (Stipulation of Facts, P 2). The letter, captioned "60 DAY NOTICE", stated "pursuant to the provisions of the Labor Management Relations Act of 1947, you are hereby notified that we intend to change, modify or terminate the Collective Bargaining Agreement presently in force between your Company and our Union." (Stipulation of Facts, Exhibit B).

 Meetings between Luden's and Union representatives to discuss terms of a new collective-bargaining agreement commenced on March 11, 1991, prior to the April 29 expiration date set by the 1988 CBA. (Stipulation of Facts, P 3). A series of negotiations took place between the Union and Luden's both before and after the April 29 expiration date. *fn4" (Stipulation of Facts, P 3). On April 29, 1991, the scheduled expiration date of the 1988 CBA, Donald B. Watson notified Union employees of the status of negotiations. (Stipulation of Facts, P 5). Watson's notice stated, "[Luden's and the Union] have agreed to disregard the deadline of April 30, and continue operating under the terms of the current contracts." (Stipulation of Facts, Exhibit F).

 During the course of negotiation, Luden's and the Union's negotiating committee made several offers and counteroffers for terms of a new contract. (Stipulation of Facts, PP 4, 6, 8, 10). On May 3, May 16, June 6, and July 15-19 (collectively), Luden's sent letters to the Union and its members informing them of the company's bargaining position and urging them to accept its contract offers at their Union ratification meetings. (Stipulation of Fact, Exhibits G-J). Each of these letters stated that wages would be paid retroactively to April 29 if the offer was accepted. (Id.5 ). Each of these offers was rejected by the Union. (Stipulation of Facts, PP 4, 7, 9, 12). In addition, the May 3, 1991 letter from Mr. Watson to Union Business Representative Francis Ryan stated, "pursuant to Article XXIX of our contract, I am hereby notifying you that we are terminating the contract effective 12:01 AM Monday May 13, 1991." (Stipulation of Facts, Exhibit G).

 Concurrent with the ongoing negotiations, the Union filed an unfair labor practice charge with the National Labor Relations Board (NLRB) on May 29, 1991. (Stipulation of Facts, P 13). In their charge, the Union alleged that Luden's had "deliberately violated its obligations to bargain in good faith by both threatening improper actions and by undermining and bypassing the bargaining representatives of the employees." (Stipulation of Facts, Exhibit K). On July 2, 1991, the Union filed an amended charge (Stipulation of Fact, P 14) further alleging that Luden's had engaged in illegal "surface bargaining behavior by having preconceived inflexible positions with regard to its entire package and with special regard to its pension and health and welfare positions." (Stipulation of Facts, Exhibit L).

 In a letter dated August 30, 1991, Peter Hirsch, Regional Director for the National Labor Relations Board informed the Union's counsel that the NLRB would not issue a complaint. (Stipulation of Fact, P 15). Specifically, the NLRB found that Luden's had not engaged in unlawful direct dealing or made unlawful threats because Luden's letters to the Union employees "did not contain any coercive statement, did not invite direct bargaining with the Employer, and the information fairly represented the Employer's bargaining position as previously presented to the Union." (Stipulation of Facts, Exhibit M). In addition, the NLRB found that Luden's did not engage in surfacing bargaining because it "met and bargained with the Union and attended all scheduled negotiating sessions." (Id.).

 The Union appealed the decision of the Regional Director by a Notice of Appeal dated September 6, 1991 and a supplemental filing dated September 30, 1991. (Stipulation of Facts, P 16). In the appeal, the Union contended that Luden's general distribution of the May 3, May 16 and July 15, 1991 letters (see supra note 5) to Union employees was "a blatant attempt to intimidate and coerce its employees into accepting the employer's proposal when it advised that 'should it be rejected . . . there will be no retroactive payments.'" (Stipulation of Facts, Exhibit O).

 In a letter dated October 18, 1991, the General Counsel for the NLRB denied the Union's appeal. (Stipulation of Facts, P 17). In addressing the Union's contention that the conditioning of retroactive wage increases on ratification by a certain date was coercive activity indicative of direct dealing, the General Counsel's decision stated:

It is not clear from the wording of the Article XXIX whether a 60-day notice of termination of the contract is necessary after the contract term expires. . . . Furthermore, even if we assume that Article XXIX required the Employer to give sixty days notice to terminate the contract, the letter of July 18 was sent more than 60 days after the Employer gave notice that it was terminating the contract, as per its letter of May 3, and thus the obligation to retain retroactivity was dissolved. While under this interpretation the May 17 letter would have been sent while the contract was still in effect, it was concluded that the statement referring to retroactive wage increases in the letter does not rise to the level of being coercive. Rather, the letter reflected the Employer's bargaining position and the Union was free to express its opinion that retroactivity of wages was required under the previous contract.

 (Stipulation of Facts, Exhibit P).

 Finally, on November 1, 1991, during a negotiating meeting, Luden's presented another offer to the Union's negotiating committee for consideration. (Stipulation of Facts, P 18). The November 1 offer was silent with respect to the issue of retroactive wages. (Stipulation of Facts, Exhibit Q). The rank and file membership of the Union voted to accept certain benefits and terms of the November 1 offer. (Stipulation of Facts, P 19).

 On November 11, 1991, Luden's posted a Notice listing the pertinent details of the contract ratified on November 2, 1991. (Stipulation of Facts, P 20). The Notice stated that the new pay rates would be effective November 4, 1991. (Stipulation of Facts, Exhibit R). Following the November 2 ratifying vote, Luden's prepared a new Agreement for signature by the parties, reflecting Luden's understanding of the terms of the vote and the November 11 Notice. (Stipulation of Facts, P 21). Like the November 11 Notice, Schedule A to this Agreement provides a November 4, ...

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