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SILVERCUP BAKERS, INC. v. FINK BAKING CORP.

September 15, 1967

Silvercup Bakers, Inc., Plaintiffs
v.
Fink Baking Corp., et al., Defendants


Frankel, D.J.


The opinion of the court was delivered by: FRANKEL

FRANKEL, D.J.:

This is a motion by a labor union and its officers to stay or dismiss a private antitrust suit on the ground that the controversy must be referred to an arbitrator. The movants are joined as defendants in the action with nine baking companies; all are charged with conspiring to eliminate the plaintiff as a competitor in the sale of bread and other baked goods to the restaurant and institutional trade. The union's role is alleged to have included, by agreement with plaintiff's competitors, a scheme (allegedly effectuated) to cause the mass resignation of plaintiff's employees. The motion to require arbitration has been argued (and opposed) with vigor and learning. But it lacks merit.

 1. There is a threshold question as to the applicable agreement and arbitration clause. The court finds it unnecessary to resolve this issue. Accepting the arbitration provision upon which the movants rely, their theory must be rejected.

 2. The arbitration provision thus treated as pertinent for purposes of this motion provides:

 
"(a) There shall be arbitration for all disputes which may arise between the parties hereto, except as provided in [two specified Articles]; except that the arbitrator shall have no power to alter, amend, revoke or suspend any of the provisions of this Agreement.
 
"(b) The matter in dispute shall be submitted to an arbitrator who shall be appointed by the New York State Board of Mediation at the request of either party. The decision of such arbitrator shall be final and binding upon the parties hereto.
 
"(c) Arbitration shall commence no later than 2 weeks after the dispute arises.
 
"(d) The Union shall have the right to strike in the event that the Employer fails to comply with the Arbitrator's award promptly."

 The movants argue, correctly, that the quoted language is broad. And they urge, still correctly, that the agreement to arbitrate must be appraised in the context of the many recent decisions commanding that such undertakings be construed spaciously and hospitably, resolving doubts in favor of the arbitral tribunals chosen by the parties. E.g., United Steelworkers of America v. American Mfg. Co., 363 U.S. 564, 4 L. Ed. 2d 1403, 80 S. Ct. 1343 (1960); United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 4 L. Ed. 2d 1409, 80 S. Ct. 1347 (1960); John Wiley & Sons v. Livingston, 376 U.S. 543, 11 L. Ed. 2d 898, 84 S. Ct. 909 (1964). Beyond this, however, the argument for the motion veers sharply away from the premises on which the rules governing this subject have been fashioned.

 When the Supreme Court and others following it have ordered that provisions for labor arbitration be liberally construed, the express and repeated starting point has been that such engagements are designed for the adjustment of "grievances" - i.e., claims that there have been violations of the collective agreement. See, e.g., Steelworkers v. Warrior & Gulf Co., supra, 363 U.S. at 584; Old Dutch Farms, Inc. v. Milk Drivers & Dairy Emp. Local Union, 359 F.2d 598, 602 (2d Cir. 1966). The many decisions confiding such controversies to privately selected arbitrators rather than courts have served in large measure to implement and elaborate the policy declared by Congress in Section 203(d) of the Labor Management Relations Act, 1947, 61 Stat. 154, 29 U.S.C. ยง 173(d), which says: "Final adjustment by a method agreed upon by the parties is hereby declared to be the desirable method for settlement of grievance disputes arising over the application or interpretation of an existing collective-bargaining agreement." See Steelworkers v. American Mfg. Co., supra, 363 U.S. at 566. It is in the context of this policy, reflecting judgments upon the practices and expectations of those who negotiate and live with labor agreements, that arbitration has come to be viewed as "part and parcel of the collective bargaining process itself." Steelworkers v. Warrior & Gulf Co., supra, 363 U.S. at 578.

 Running through the cases is the basic assumption, rested upon the familiar law and facts of the collective relationship, that the substantive concerns and jurisdictional mandate of the arbitrator are measured ultimately by the collective agreement. See, e.g., United Steelworkers of America v. Enterprise Wheel and Car Corp., 363 U.S. 593, 597-99, 4 L. Ed. 2d 1424, 80 S. Ct. 1358 (1960). To be sure, the arbitrator's province is not to be defined by reading the contract with narrow literalism. For the collective agreement "is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate." United Steelworkers v. Warrior & Gulf Co., supra, at 578. In administering that "code," the arbitrator evolves "the common law of a particular industry or of a particular plant." Id. at 579. "The processing of disputes through the grievance machinery is actually a vehicle by which meaning and content are given to the collective bargaining agreement." Id. at 581.

 The illustrative quotations in the preceding paragraph, like all the precedents the movants invoke, are addressed to the multifarious kinds of disputes (grievances) that arise from, center upon, or are at least colorably referable to the substantive terms of the collective agreement. It is for disputes of this kind that the parties to such agreements choose arbitrators rather than courts. It is in the context of this agreed preference that the Supreme Court has ordered a presumption strongly favoring arbitration. In the collectively bargained scheme of "industrial self-government" (Steelworkers v. Warrior & Gulf Co., supra, 363 U.S. at 580), with its specialized problems and attendant corps of presumably expert arbitrators, the arbitral process has won a preferred place (subject to the parties' agreement, of course) over the generalist facilities of the courts. This is the setting in which the highest Court has said (id. at 581): "The labor arbitrator performs functions which are not normal to the courts; the considerations which help him fashion judgments may indeed be foreign to the competence of courts." This is also the setting in which the parties now before the court must be supposed to have written their arbitration clause.

 Ignoring the context that makes words manageable and finite, the movants would read the provision for arbitration of "all disputes" with heroically literal sweep. They would apply it now to a claim wholly unrelated to the agreement, a claim which has nothing to do with "the common law" of the plant or industry and is in no remote sense affected by the "meaning and content" of the collectively bargained "code." *fn1" The argument is that the reference to "all disputes" was meant to exclude the federal courts from their "normal" and exclusive role under the antitrust laws and to refer such matters to the highly abnormal (i.e., evidently unprecedented for this purpose) procedure of labor arbitration.

 3. It is arguable, and plaintiff has argued, that an agreement requiring arbitration of private antitrust claims would be unenforceable in any event. Cf. Wilko v. Swan, 346 U.S. 427, 98 L. Ed. 168, 74 S. Ct. 182 (1953); Fanchon & Marco, Inc. v. Paramount Pictures, 107 F. Supp. 532, 548 (S.D.N.Y. 1952), rev'd on other grounds, 202 F.2d 731 (2d Cir. 1953). Suits of this kind are designed to further broad public interests transcending the private objectives of the parties. See, e.g., Minnesota Mining and Manufacturing v. N.J. Wood Finishing Co., 381 U.S. 311, 318, 14 L. Ed. 2d 405, 85 S. Ct. 1473 (1965); Lawlor v. National Screen Service, 349 U.S. 322, 329, 99 L. Ed. 1122, 75 S. Ct. 865 (1955); Monarch Life Ins. Co. v. Loyal Protective Life Ins. Co., 326 F.2d 841, 846 n. 2 (2d Cir. 1963), cert. denied, 376 U.S. 952, 11 L. Ed. 2d 971, 84 S. Ct. 968 (1964). Trial by jury, not by arbitrators expert in other things, is "an essential part of the congressional plan for making competition rather than monopoly the rule of trade * * *." Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 504, 3 L. Ed. 2d 988, 79 S. Ct. 948 (1959). The deterrent ...


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