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MONROE SANDER CORP. v. LIVINGSTON

November 17, 1966

Monroe Sander Corporation, Plaintiff
v.
David Livingston, Defendant. Lacquer Specialties, Inc., Plaintiff v. Same


Tenney, District Judge.


The opinion of the court was delivered by: TENNEY

MEMORANDUM

TENNEY, District Judge.

 Plaintiffs Monroe Sander Corporation (hereinafter referred to as "Monroe") and Lacquer Specialities, Inc. (hereinafter referred to as "Lacquer") have moved herein for orders temporarily staying arbitration proceedings commenced by the defendant (hereinafter sometimes referred to as the "union"), pending the determination of plaintiffs' actions for declaratory judgments permanently staying said arbitration and vacating the notices of arbitration served on them by the union. The defendant union has moved for summary judgment in both actions. Because of the interlocking nature of the cases, I am considering them together.

 Federal jurisdiction is invoked under Section 301(a) of the Labor Management Relations Act, 61 Stat. 156 (1947), 29 U.S.C. § 185 (1964). Plaintiffs seek declaratory judgments under the provisions of the Federal Declaratory Judgment Act, 28 U.S.C. §§ 2201-02 (1964). The defendant union does not attack the jurisdiction of this Court, as indeed it could not. See Black-Clawson Co. v. International Ass'n of Machinists, 313 F.2d 179 (2d Cir. 1962); Application of Contessa Lingerie, Inc., 227 F. Supp. 37 (S.D.N.Y. 1964). Nor does the union dispute Monroe's contention that federal law developed under the provisions of Section 301 of the Labor Management Relations Act is to be applied. Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95, 7 L. Ed. 2d 593, 82 S. Ct. 571 (1962); United Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 4 L. Ed. 2d 1409, 80 S. Ct. 1347 (1960); Textile Workers Union v. Lincoln Mills of Alabama, 353 U.S. 448, 1 L. Ed. 2d 972, 77 S. Ct. 912 (1957).

 Accordingly, a discussion of the facts insofar as they are pertinent hereto is in order. For the most part, these are not disputed.

 For over 40 years, Monroe owned and operated a plant in Long Island City, New York, for the manufacture of paints, lacquers, varnishes and enamels. Since February 1964, Monroe has been a subsidiary of the American Petrochemical Corporation (hereinafter referred to as "Petrochemical"). All of Petrochemical's plants are unionized. For over 25 years, Monroe's production employees were represented by the defendant union for the purposes of collective bargaining.

 On June 15, 1964, a collective bargaining agreement was executed by Monroe and the union for a period of one year which set forth all the terms and conditions of employment. Said agreement provided that

 
any controversy, claim or dispute or grievance of any nature whatsoever arising between the Employer and the Union or any employees, including but not being limited to questions of meaning, interpretation, operation, or application of any clause of this agreement, or concerning any breach or threatened breach of this agreement by either party or concerning any acts, conduct or relations of whatsoever nature between the Union and the Employer, directly or indirectly . . .

 shall be settled through a grievance procedure culminating in arbitration. After the expiration of said contract, on October 11, 1965 it was extended for an additional year retroactive from June 15, 1965 to June 15, 1966. The extension contained no increase in wages nor did it provide for any other direct economic benefit to the employees. The only changes made by said extension agreement related to eligibility rules for vacation and sick leave, none of which are relevant here. Monroe contends that the reason for the lack of any pay increase was the union's awareness of the company's perilous financial condition.

 In January 1966, Monroe alleges that it began considering closing its plant and discontinuing production because of increasing losses. According to said corporation, this was necessitated by the deterioration of the plant buildings and the obsolescence of the machinery and equipment which resulted in an extremely low productivity rate. Accordingly, on January 28, 1966, Monroe advised the union of its plight, stating that

 
"we may find it necessary to close the company entirely, move to a different plant which lends itself to greater production efficiency or combine the products of this plant with another operation of the [Petrochemical] company either now in existence or which may be acquired in the future." (Exhibit 2 to Reznick Affidavit, dated June 27, 1966.)

 On March 25, 1966, the union wrote to Monroe advising said company that it would seek modification of the contract and asking Monroe to arrange a convenient date for a meeting. Monroe responded to this letter on March 30, 1966, setting forth its proposed modification of the collective bargaining agreement, to wit: extension of the present agreement to October 31, 1966, at which time it would expire in its entirety.

 At the beginning of April 1966, meetings were held by Monroe with the union representatives and later with the employees, at which Monroe detailed its problems and the union responded with a demand for a new contract.

 At about the same time, Monroe advised the union that Petrochemical was considering the acquisition of Lacquer, a New Jersey corporation engaged in the manufacture of paints and lacquers. The union was told that Lacquer had the capacity to produce sufficient paints and lacquers to fulfill the requirements of Monroe's remaining customers. *fn1"

 No written answer was received by Monroe to its proposal of March 30, 1966 until April 22, 1966, when the union, seemingly oblivious to the financial position of Monroe, submitted a counterproposal setting forth demands for a two-year contract with a wage increase of $6.50 per week for each employee for each year of the contract, a cost-of-living review every six months, and other proposals not entirely pertinent hereto.

 On April 28, 1966, Petrochemical signed an agreement with Lacquer to acquire its assets and business. As of the date of the argument of this motion (August 9, 1966), no closing had taken place since the agreement was contingent upon the fulfillment of several conditions, including the obtaining of a favorable tax ruling from the Treasury Department.

 Meanwhile, in or about the second week of May, and continuing into the early part of June 1966, the employees of Monroe began activity designed to interrupt said corporation's production by means of excessive absenteeism, slowdown of work and sabotage. *fn2"

 On May 30, 1966, Monroe, as a result of this interference with production and because of the union's alleged refusal to discuss said corporation's problems, wired the union offering to meet on June 1, 1966. Said offer was accepted, and at that time the problems of Monroe were discussed. At about the same time, the union raised the issues of the "Moving Clause" *fn3" and the "Basic Crew Clause" *fn4" of the collective bargaining agreement.

 On June 4, 1966, Monroe, as a result of the June 1, 1966 meeting, submitted a further proposal to the union, substantially similar to the proposal of March 30, 1966, but additionally offering Monroe's employees preferential hiring at Lacquer for a four-month period commencing June 15, 1966, provided Petrochemical acquired ownership of Lacquer and jobs became available. Monroe asserts that no jobs are presently available at Lacquer but there might be a possibility of employment opportunity if Lacquer were able to acquire Monroe's customers. However, Monroe further alleges that ...


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