Appeal from a judgment of the United States District Court for the Eastern District of New York, Jacob Mishler, Chief Judge, ordering arbitration of a labor-management dispute involving the subcontracting of certain work by the appellant, and declaring the provision relating to subcontracting in the governing collective bargaining agreement void under section 8(e) of the National Labor Relations Act, as amended.
Kaufman, Chief Judge, and Hays and Oakes, Circuit Judges.
This is an appeal in an action brought under section 301(a) of the National Labor Relations Act, 29 U.S.C. § 185(a) (1970), by a union to compel arbitration of a dispute concerning the interpretation and validity of a clause in a collective bargaining agreement which permits the employer to subcontract work, but only to union shops. The district court ordered arbitration, but declared the entire subcontracting clause void as violating section 8(e) of the National Labor Relations Act, as amended, 29 U.S.C. § 158(e) (1970). The employer appeals, claiming that the district court should have voided only so much of the contract clause as limits subcontracting to union shops. We affirm.
The material facts are not disputed.
Sterling Optical Company [Sterling] operates a warehouse and optical laboratory in Brooklyn, New York, and a large number of optical stores in the greater New York metropolitan area. The United Optical Workers Union Local 408 [Local 408], an affiliate of the International Union of Electrical, Radio and Machine Workers, AFL-CIO, is the exclusive collective bargaining agent for Sterling employees. Since 1954, Sterling and Local 408 have been parties to a continuous series of collective bargaining agreements, the most recent of which was entered into as of April 30, 1973, and is currently effective.
The present dispute arises out of actions taken by Sterling in September 1973. On September 17, 1973, Sterling announced to the Local 408 business manager that it had decided to subcontract to a non-union shop certain laboratory work being performed at the Brooklyn plant by bargaining unit employees, a decision terminating the employment of 36 Local 408 members. Two days later the business manager sent a telegram to Sterling requesting a meeting, and on September 21 representatives of Sterling and Local 408 met and conferred. The union took the position that the proposed subcontracting violated various provisions in the 1973 collective bargaining agreement, the most pertinent of which is Article XXVIII, which reads as follows:
"It is agreed by and between the Parties that whereas the Employer send [sic] work out to be done in different establishments under diffeent managements, therefore, upon the signing of this Agreement all said work shall be sent out to Union establishments."*fn1
Sterling took the position that Article XXVIII did not have the effect of forbidding subcontracting because the union shop provision was a "hot cargo" clause offensive to section 8(e) of the National Labor Relations Act.
The parties failed to adjust their differences at the meeting. The Local 408 representative presented Sterling with a written demand for arbitration, as was its right under Article VIII of the 1973 agreement. Article VIII refers to arbitration all disputes that are not adjusted by representatives of Sterling and Local 408:
"Any and all grievances or disputes between the Employer and his employees which cannot be satisfactorily adjusted by a representative of the Employer and a duly authorized representative of the Union shall be referred to an Arbitrator to be selected by the American Arbitration Association whose decision in the matter shall be final and binding upon both Parties to this Agreement, even though one of the Parties shall fail to appear; and such award shall be enforceable in any Court of competent jurisdiction."
Sterling resisted Local 408's demand for arbitration because of the Article XXVIII issue, but it has not opposed arbitration as to issues raised by the contract clauses aside from Article XXVIII.
On September 25 Local 408 commenced this action to compel arbitration of the Article XXVIII issue. Sterling counterclaimed for a judgment declaring Article XXVIII void and unenforceable under section 8(e) insofar as it purports to limit Sterling's right to subcontract. The parties cross-moved for summary judgment. On December 10 the district court entered its judgment ordering Sterling to submit the dispute to arbitration and declaring that the entirety of Article XXVIII "is violative of § 8(e) of the National Labor Relations Act as amended (29 U.S.C. § 158(e)) and is null and void and of no effect . . . ." In its accompanying memorandum it found that the subcontracting dispute is subject to arbitration under Article VIII of the 1973 agreement, but that the issue of the validity of Article XXVIII under section 8(e) is not subject to arbitration. In declaring Article ...