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GALLO WINE SALES OF NEW JERSEY v. WHOLESALE WINE S

April 23, 1981

GALLO WINE SALES OF NEW JERSEY, INC., Plaintiff,
v.
WHOLESALE WINE SALESMEN'S UNION, LOCAL 18, Distillery, Rectifying, Wine and Allied Workers International Union of America, AFL-CIO, Defendant



The opinion of the court was delivered by: GOETTEL

This labor dispute has come to this Court on a motion to enjoin arbitration and a cross motion to compel arbitration.

THE FACTS

On June 1, 1975, the plaintiff ("Company") entered into a collective bargaining agreement ("1975 Agreement") with the defendant ("Union"), which, by its terms, was to expire on May 31, 1978. The 1975 Agreement included an "Earning Guarantee" clause, which provided that the "salesmen shall always receive a commission on any sale made or effected by the Employer in any manner or form, either directly or indirectly." 1975 Agreement, Art. VI(B). The 1975 Agreement provided for arbitration as follows:

 
Article XVI (A) Except as otherwise provided herein, in the event any dispute, difference, disagreement, grievance or controversy of any nature or character shall arise between the Employer and the Union, the parties agree 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 to the New York State Board of Mediation, pursuant to its rules. The decision of the arbitrator shall be final and binding on all the parties to the arbitration. The failure on the part of the Employer to agree to submit such dispute with the Union to arbitration or abide by the result of any such arbitration shall be deemed a breach of contract.
 
(B) Violations by the Employer of Article(s)... VI... shall constitute a breach of this agreement and an unfair labor practice, notwithstanding anything contained in Article XVI (A) or any other provision of this agreement. Any such violation shall entitle the Union to apply for, without notice, and obtain, without opposition, an injunction or other order restraining such breach and/or repetitions thereof from a court of competent jurisdiction, and in addition, the Union may resort to any other economic action free of any restriction or condition that may be imposed by any provision of this agreement, and without the necessity of first resorting to arbitration.

 Article XXVI provided for negotiation for renewal of the 1975 Agreement. *fn1"

 On March 14, 1978, pursuant to section 8(d) of the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. ยง 158(d), the Union sent timely notice to the Company of its intention not to renew or extend the 1975 Agreement and to negotiate a new agreement. On March 22, 1978, the Company acknowledged the Union's notice and expressed its similar intent. From April 1978 through September 1978, the parties negotiated for a new collective bargaining agreement, the central issue of which was the sales commission rate.

 On September 25, 1978, the Union filed charges with the National Labor Relations Board ("Board"), charging the Company with the commission of an unfair labor practice for its refusal to bargain collectively with the Union with respect to, and for unilaterally changing, a term and condition of employment. On November 30, 1978, the Board issued a complaint, and on May 25, 1979, after nine days of hearings before Administrative Law Judge ("ALJ") Julius Cohn, the parties entered into a Settlement Agreement, which provided in part:

 
2. The parties recognize that settlement of this matter will create an interim period of time from the date of settlement to the date when the parties conclude bargaining with the execution of a collective bargaining agreement or reaching of impasse. Recognizing the existence of this interim period, and in light of the necessity to provide a compensation rate for the employees, compensation shall be calculated as follows .... The parties further recognize that the above compensation rates are not intended to constitute contract terms or to reflect the parties' positions at collective bargaining negotiations and are meant for this interim period only.
 
3. The terms and conditions of employment currently in effect shall continue during said interim period, provided, however, that the "Earning Guarantee" shall be discontinued and terminated upon entering of this settlement.

 Pursuant to the Settlement Agreement, the Company paid back-pay from October 1, 1978 through July 27, 1979 at 61/4%, the rate provided in the 1975 Agreement, and from July 27 onward at the rate dictated by the Settlement Agreement. On October 11, 1979, ALJ Cohn closed the hearing, and on October 31, 1979, the matter was officially closed by Arthur Eisenberg, Regional Director of the Board.

 Negotiations for a new contract had resumed on May 25, 1979. Although no early agreement was reached and the Union struck on November 5, 1979, the Company continued to sell and deliver wine. On November 28, the parties entered into a new collective bargaining agreement ("1979 Agreement"), which excluded the "Earning Guarantee" clause and included a new arbitration procedure. Article V of the 1979 Agreement provides:

 
The parties agree that all disputes, grievances, issues or conflicts that may arise regarding the application or interpretation of any of the provisions of this Agreement (sic) shall, if they cannot be settled between the parties, be submitted to arbitration in the manner provided for under Article IV, section 4:02 above. The arbitrator shall not have the right, however, to change, modify, add to or subtract from any of the terms or provisions of this Agreement.

 Article IV, section 4:02 provides in part:

 
In the event that any grievance is not settled between the parties pursuant to the grievance procedure set forth above and as hereinafter referred to, the Union or the Employer may submit the dispute to arbitration by the Federal ...

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