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Alvado v. General Motors Corp.

December 22, 1955


Before FRANK, HINCKS and WATERMAN, Circuit Judges.

Plaintiff sues under § 8 of the Selective Training & Service Act of 1940, 50 U.S.C. Appendix, Section 308 (hereinafter referred to as the Act), on behalf of himself and other veterans similarly situated*fn1 to recover vacation pay for the fiscal year ending in June 1946, which allegedly was denied them by a discriminatory collective bargaining agreement entered into by defendant and plaintiff's union, United Auto Workers, CIO, on March 19, 1946. Plaintiff has been in the employ of defendant since 1933. He entered military service in February 1944, and, after being honorably discharged, was reinstated as an employee on October 30, 1945.

Beginning in 1940, a clause providing for vacation pay has been adopted annually in an agreement between the United Auto Workers Union and defendant, through collective bargaining between defendant and the union. Until the 1946 agreement, and for each year since, the annual collective bargaining agreement provided for vacation pay for all hourly-rated employees who were employed for any period of time at the end of the vacation year, July 1 to June 30 or, in 1943 and thereafter, a single day in the last weekly pay period at the end of the vacation year.The amount of vacation pay was determined by seniority; those with one-year seniority were entitled to forty hours' pay, and those with five or more years seniority received eighty hours' pay. During the war years of 1943, 1944, and 1945, when the work week was increased from five to six days, the vacation pay was raised to forty-eight and ninety-six hours' pay.

On November 21, 1945, the union called a strike which lasted until March 13, 1946. Because of the strike, defendant proposed, in negotiations with the union, that the amount of vacation pay be based on a percentage of earnings for the fiscal year ending in June 1946, rather than on the forty or eighty hours' pay basis used up to that time, in order to reduce vacation pay proportionately to the time lost in the strike. The union objected because this would place the entire burden of the strike on the employees; it proposed that the percentages be applied to earnings during the calendar year 1945. This would be more favorable to the strikers, since the bulk of the strike had taken place in 1946. Defendant agreed, and the new contract provided, that the amount of vacation pay was to be fixed at 2%, 3% or 4 1/2% of the employees' total gross earnings for the calendar year 1945, for those with more than one, three, or five years seniority, respectively. Eligibility was still determined by whether an employee worked in the last weekly pay period at the end of June 1946.

The plan ultimately adopted effectively deprived returning veterans of most, if not all, of their vacation pay for 1946, since most of them returned to work in the latter part of 1945; with the strike on from November 21, 1945, they had little earnings in the calendar year 1945. The result would have been the same, though not to such a great degree, if the defendant's plan to take a percentage of the earnings in the fiscal year 1946 had been adopted.

Plaintiff alleged that the agreement deprived veterans in the class, on whose behalf this suit is brought, of rights expressly granted to them under § 8(c) of the Act. Plaintiff, in particular, alleged that, at the time of the negotiations which resulted in the 1946 agreement, defendant knew and intended that the agreement would have the effect of depriving veterans of almost all vacation pay in the year in which they returned (i.e., calendar year 1945 and fiscal year 1946).

Defendant, in its answer, denied that the purpose or effect of the agreement was to discriminate against veterans with respect to vacation pay. Both plaintiff and defendant moved for summary judgment. In support of its motion, defendant filed affidavits stating the negotiations between itself and the union and purporting to show that the plan eventually adopted was proposed by the union. It also showed by affidavit that there was no established practice as to vacation allowances, as this was a subject of annual negotiation and agreement. It alleged that, therefore, there was no discrimination within the meaning of the statute.

The court below denied plaintiff's motion for summary judgment and granted the cross-motion of the defendant. It held that, since there was no established practice as to vacation pay, a collective bargaining agreement changing the method of computing the amount as to all employees while the plaintiffs were away did not constitute discrimination as to them. By a summary judgment order, the complaint was dismissed. Plaintiff has appealed.

FRANK, C.J.: 1. Vacation pay does not come within those provisions of 50 U.S.C. § 308(c), ensuring restoration of a veteran's rights without loss of seniority, but within the provision that a veteran "shall be entitled to participate in insurance or other benefits offered by the employer pursuant to established rules and practices relating to employees on furlough or leave of absence (C.A.2); Dwyer v. Crosby Company, person was inducted" into the Armed Forces. See Siaskiewicz v. General Electric Company, 166 F.2d 463, 465-466 (C.A. 2); Dwyer v. Crosby Company, 167 F.2d 567 (C.A.2). Consequently, Oakley v. Louisville & N.R. Co., 338 U.S. 278, Fishgold v. Sullivan Drydock & Repair Corp., 328 U.S. 275, and Diehl v. Lehigh Valley R. Co., 348 U.S. 960, are inapposite, since they dealt solely with the seniority provisions of § 308(c) and not at all with the "other benefits" provision of that clause. Since vacation pay was subject to annual negotiation and agreement, the court below properly denied the plaintiff's motion for summary judgment since he was not entitled, as a matter of law, to "other benefits" calculated under the 1940 agreement.

2. However, plaintiff also alleged that the collective bargaining agreement adopted in 1946 unlawfully discriminated against returning veterans like himself. If the sole evidence of discrimination were the agreement itself, we would feel constrained by the precedents to affirm the summary judgment. But here plaintiff alleged that defendant intended, by means of the agreement, to discriminate against veterans for its own financial gain. Such an allegation of "bad faith" states a good cause of action under § 308(c), and plaintiff must therefore be given the opportunity at a trial to produce evidence, in addition to the agreement, in support of that allegation.

In Aeronautical Lodge v. Compbell, 337 U.S. 521, the Court significantly ended its opinion thus:

"All this presupposes, obviously, that an agreement containing the 1945 provisions expresses honest desires for the protection of all members of the Union and is not a skillful device of hostility to veterans. There is not the remotest suggestion that the 1945 agreement was other than what it purported to be. * * *"

In Ford Motor Company v. Huffman, 345 U.S. 330, 338, the Court said that, under NLRA, a collective bargaining agreement is ordinarily not susceptible to attack, because of discrimination, but that this conclusion is "subject always to complete good faith and honesty of purpose. * * *" Cf. Steele v. L. & N.R. Co., 323 U.S. 192, 203-204. In Foster v. General Motors Corporation, 191 F.2d 907, 912 (C.A.7), the court said:

"There is no allegation in the complaint that the agreement between the defendant and the union was made in bad faith, and no allegations of fact which, in our view, could form the basis for any legal discrimination."

In Dougherty v. General Motors Corporation, 179 F.2d 561, 563 (C.A.3), the court said that plaintiff "makes no allegation that such discrimination was intended, and in fact he affirmatively states that the situation ...

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