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Cofab, Inc. v. Philadelphia Joint Bd.

April 08, 1998

COFAB, INC.
v.
PHILADELPHIA JOINT BOARD, AMALGAMATED CLOTHING AND TEXTILE WORKERS UNION, AFL-CIO-CLC A/K/A UNITE! PHILADELPHIA JOINT BOARD, AMALGAMATED CLOTHING & TEXTILE WORKERS UNION, AFL-CIO-CLC, A/K/A UNITE, APPELLANT



On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 97-cv-01835) Argued January 22, 1998

Before: Sloviter, LEWIS*fn1 and Rosenn, Circuit Judges

The opinion of the court was delivered by: Sloviter, Circuit Judge.

OPINION OF THE COURT

The Philadelphia Joint Board, Amalgamated Clothing & Textile Workers Union, AFL-CIO-CLC, also known as Unite! ["the Union"], appeals from the district court's order staying the action before it pending the final completion of related proceedings before the National Labor Relations Board. The action was filed pursuant to section 301 of the Labor Management Relations Act, as amended, by Cofab, Inc., seeking an injunction and an order vacating and/or staying enforcement of an arbitrator's award finding that Cofab was the alter ego and successor of DA Clothing Co. The Union filed a counterclaim to enforce the award. Cofab filed a motion to stay, which the district court granted, and the Union appeals. Before we can consider the merits of the Union's agreement, we must decide whether we have jurisdiction over the district court's order granting a stay.

I.

DA Clothing Company, the alleged predecessor to Cofab, operated a manufacturing facility in Clifton Heights, Pennsylvania, and was a party to a Collective Bargaining Agreement ("CBA") with the Union. On December 17, 1993, the company closed its doors without giving any notice to the Union. The following month, the son of the former owner of DA Clothing opened a new non-union plant, under the name Cofab, Inc., about fifteen minutes away from the location of DA Clothing. Cofab hired many of the former employees of DA Clothing, retained much of DA Clothing's equipment, and serviced the same single customer.

In March 1994, the Union filed an unfair labor practice charge against Cofab with the National Labor Relations Board, asserting that, as the successor and alter ego of DA Clothing, Cofab was bound by the collective bargaining agreement between DA Clothing and the Union. Following a two-day hearing in January 1995, an Administrative Law judge determined that Cofab was a successor to, but not an alter ego of, DA Clothing. Joined by the Union, the General Counsel of the NLRB filed exceptions to the ALJ's determination that Cofab was not an alter ego. There was a hearing in Washington, D.C., after which the NLRB issued its decision on September 5, 1996, concluding that Cofab and DA Clothing were alter egos, and that Cofab was therefore obligated to comply with the terms of the collective bargaining agreement between DA Clothing and the Union. On September 30, 1996, however, the NLRB General Counsel filed a motion to modify or clarify the NLRB's order. Both parties assumed that this motion remained pending up to the time of oral argument on this appeal.

Buoyed by the NLRB finding that Cofab was an alter ego of DA Clothing, in October 1996 the Union filed a request for expedited arbitration of its grievances pursuant to the collective bargaining agreement between the Union and DA Clothing. Cofab sought a temporary restraining order in the district court to stay the arbitration. The district court denied the request for a stay, stating that Cofab could present its jurisdictional argument to the arbitrator. At the arbitration hearing in November 1996, Cofab appeared only for the purpose of registering its objection that the arbitrator lacked jurisdiction over Cofab on the ground that it was not a party to the CBA, and was not subject to its terms. The arbitration nevertheless proceeded in Cofab's absence.

On January 31, 1997, the arbitrator filed his opinion and award. The arbitrator rejected Cofab's jurisdictional objection and in a written opinion noted that the facts presented before him were the same as the facts presented before the Administrative Law Judge of the NLRB to which Cofab had not filed exceptions. He found that the two real principals of DA Clothing Company were Phyllis D'Amore and her son Robert D'Amore, that they closed the operating facility and reopened under the Cofab, Inc. name, with Robert D'Amore being designated the chief executive officer while his mother occupied some other corporate position but that they both participated as they had under the label of DA Clothing Co., that their employees were the same, and that their one customer was the same, and that therefore Cofab meets "all of the contract criteria for being deemed a successor" as envisioned by the CBA. App. at 34-35. After concluding that Cofab was bound by the CBA, the arbitrator ordered Cofab to observe the terms of the CBA, and awarded the Union $1,394,529 in damages. App. at 38-39.

On March 13, 1997, Cofab filed in the district court the complaint that initiated this suit in which it sought to vacate the award, "and/or for [a] preliminary and permanent injunction staying enforcement of [the] arbitration award." App. at 4. Cofab stated that if the NLRB decision remained unchanged by the motion for modification, it intended to appeal to this Court. Cofab contended that a stay pending a final decision from the NLRB would be appropriate because it would prevent costly relitigation in the district court of the same issues presented to the ALJ and the NLRB. The Union argued that the motion pending before the NLRB requested only a clarification of the remedy and did not seek to modify the substance of the Board's decision, and it asked the district court either to enforce or vacate the award.

The district court declined the Union's request, and instead it stayed the action. The district court stated:

To make any ruling on the arbitrator's award, I would have to determine whether the arbitrator had jurisdiction, an issue that hinges on whether Cofab and DA are alter egos. Accordingly, I would have to make the same determination on alter ego status that has been made by the Board, and that will ultimately be made by the Third Circuit on appeal of the Board's order. The Union rightly points out that the Board and arbitration proceedings are separate proceedings designed to enforce different rights. The central question in each of these proceedings, however, is the same--whether Cofab is the alter ego of DA. Cofab has represented to this court that it will pursue an appeal to the Third Circuit as soon as the Board certifies its decision. Presumably, the Third Circuit will then rule on Cofab's alter ego status. Under these circumstances, I find that a stay of these proceedings is appropriate.

App. at 122-23. The district court also ordered the parties to "keep the court advised of all relevant proceedings." App. at 125. The district court docket entries indicate that the case was never closed.

The Union filed this appeal contending, preliminarily, that the district court erred by not dismissing Cofab's complaint because it was filed thirty-six days after the issuance of the arbitrator's award, beyond the thirty day period to challenge an award set by 42 Pa. Cons. Stat. ยง 7314. The Union also challenged the stay on the merits, arguing that: (1) the stay was inconsistent with the court's earlier ruling denying a stay pending arbitration; (2) the award can be enforced based upon the undisputed ...


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