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HILLER v. LIQUOR SALESMEN'S UNION

February 3, 1964

Roger L. HILLER and Kenneth A. Hiller, Administrators of the Estate of Louis L. Hiller, Deceased, Plaintiffs,
v.
LIQUOR SALESMEN'S UNION LOCAL NO. 2, Popper-Morson Corporation and TheAmerican Distilling Company, Inc., Defendants



The opinion of the court was delivered by: BRYAN

The defendants move, pursuant to 9 U.S.C. § 3, for a stay of proceedings pending arbitration in an action brought by the administrators of the Estate of Louis L. Hiller, Deceased, against the Liquor Salesmen's Union Local No. 2, of which the deceased had been a member, and against Popper-Morson Corp. and The American Distilling Company, Inc., by whom the deceased had been employed. The complaint as amended charges that, with the knowledge, consent and/or connivance of the Union, plaintiffs' decedent had been (1) discharged from his position with American Distilling in violation of a collective bargaining agreement between the Union and American Distilling; (2) subsequently employed by Popper-Morson in violation of its collective bargaining agreement with the Union; and (3) discharged by Popper-Morson in violation of that agreement. As a result of these violations, the complaint alleged, the decedent was deprived of salary payments, commissions and Union benefits in a total amount of $ 48,860. Jurisdiction is alleged to be conferred by § 301 of the Labor Management Relations Act of 1947, 29 U.S.C. 185, and by § 102 of the Labor-Management Reporting and Disclosure Act of 1959, 29 U.S.C. § 142.

The defendants' answers deny the material allegations of the complaint and raise several affirmative defenses. In addition, the defendant American Distilling interposes a counterclaim alleging that the decedent fraudulently induced it to pay him approximately $ 13,000 in severance benefits upon the termination of his employment with it.

 Both of the collective bargaining agreements alleged to have been violated provide for the arbitration of certain disputes. Popper-Morson and American Distilling, joined by the Union, claim that the issues raised by plaintiffs are properly referable to arbitration under the terms of the collective bargaining agreements, and move, pursuant to 9 U.S.C. § 3, for a stay of these proceedings pending arbitration. Plaintiffs oppose this motion on the grounds (1) that the collective bargaining agreements do not provide for arbitration of the issues raised; (2) that they are not bound by the agreements to arbitrate between the companies and the Union; (3) that arbitration would be futile since the Union is in complete agreement with the actions of the two companies; and (4) that defendants have waived their rights to arbitration.

 Section 3 of the Arbitration Act, 9 U.S.C. § 3, provides that,

 'If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceedings is referable to arbitration proceeding is referable to arbitration on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.'

 The basic question here is whether the issues raised by plaintiffs are arbitrable under the terms of the collective bargaining agreements between the Union and the companies, and it rests with the court to decide this question. Atkinson v. Sinclair Refining Co., 370 U.S. 238, 82 S. Ct. 1318, 8 L. Ed. 2d 462 (1962); Livingston v. John Wiley & Sons, 313 F.2d 52 (2 Cir. 1963), cert. granted 373 U.S. 908, 83 S. Ct. 1300, 10 L. Ed. 2d 411; Kulukundis Shipping Co., S/A, v. Amtorg, Trading Corp., 126 F.2d 978 (2 Cir. 1942).

 The gist of the complaint is that plaintiffs' decedent was discharged by American Distilling in violation of its collective bargaining agreement with the Union; that he was subsequently employed and discharged by Popper-Morson in violation of its collective bargaining agreement with the Union; and that these violations took place with the knowledge, consent and/or connivance of the Union.

 The arbitration provision in the collective bargaining agreement between American Distilling and the Union provides that,

 '4. (A) The employer shall not discharge any salesman without just cause. In the event the employer desires to discharge a salesman, the reasons for such discharge must be given in writing in duplicate, one to the salesman and one to the union, at least two weeks prior to the proposed date of discharge. In the event that the employer and the union within such two weeks agree in writing that justifiable cause exists for the discharge or dismissal of any such salesman, the salesman may be discharged and that shall terminate the matter. In the event that during such notice period of two weeks there shall be a dispute evidenced by writing between the union and the employer as to whether just cause for the dismissal of such salesman exists, the matter shall be submitted to arbitration as hereinafter stated.

 '(D) The only reason which shall constitute just cause for discharge as hereinabove set forth shall be:

 1. dishonesty.'

 Plaintiffs' claim against American Distilling is based on the theory that their decedent did not terminate his employment with American voluntarily, but was coerced into signing a 'letter of resignation' in order to cover up the fact that he was being discharged without just cause. American Distilling takes the position that plaintiffs' decedent resigned voluntarily. It is clear that the propriety of a discharge is arbitrable under the above quoted provision. However, the question of whether there was a discharge, as opposed to a voluntary resignation, is not free from doubt. In my view, nevertheless, the issue of the manner in which the employment of plaintiffs' decedent was terminated, as well as the question of whether the termination was for just cause, should be decided by the arbitrators. As the Supreme Court has said, 'An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.' United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, at pp. 582-583, 80 S. Ct. 1347, at pp. 1352-1353, 4 L. Ed. 2d 1409 (1960).

 The collective bargaining agreement between Popper-Morson and the Union contains a provision for the arbitration of disputes concerning discharges which is the same as that contained in the agreement between American Distilling and the Union, except that the Popper-Morson agreement provides for notice of one week and permits discharge for incompetence as well as for dishonesty. Under this provision, plaintiffs' claim against Popper-Morson for allegedly wrongful discharge of their decedent is plainly arbitrable. It is equally clear, however, that this provision does not require arbitration of plaintiffs' claim that their decedent was hired in violation of the collective bargaining agreement. Popper-Morson argues that arbitration of this claim is required by clause 13(B) of its collective bargaining agreement, which provides that,

 'It is understood and agreed that in the event of a dispute between the employer and the union concerning a breach or an alleged breach of this agreement, that before any strike on the part of the union or any lockout on the part of the employer, such dispute shall be submitted to arbitration in the same manner as is ...


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