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November 26, 1982

ROOSEVELT RACEWAY, INC., JOHN MURRAY, as President of Plumbers Local Union No. 457 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, and ROBERT J. FRIEDBERG, Defendants

The opinion of the court was delivered by: PLATT



 Plaintiffs Dominick A. Palancia ("Palancia") and John A. Woods ("Woods") contend that their collective bargaining agent, defendant Local Union No. 457 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada ("Local 457"), violated § 301 of the Labor Management Relations Act, 29 U.S.C. § 185 (1978) [L.M.R.A. § 301], when it allegedly failed to contest their discharge and thereby breached its duty to represent them fairly. Plaintiffs were fired on September 28, 1979 by defendant Roosevelt Raceway, Inc. ("Raceway"), their employer, because they had not bothered to secure a license that is required both by State law and by the terms of their collective bargaining agreement ("agreement"). Consequently, Messrs. Palancia and Woods filed suit seeking, respectively, reinstatement as journeyman plumber and foreman of the Raceway's Plumbing Department, as well as compensatory and punitive damages totaling $2.25 million and $2.5 million. Local 457 and defendants John Murray, its president, and Robert J. Friedberg ("Friedberg"), its business manager, now move for an order granting summary judgment. Fed.R.Civ.P. 56(b). *fn1" "Upon review of the entire record," these defendants have met their burden of demonstrating that "there is no genuine issue of material fact." Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 444-45 (2d Cir. 1980); Karim v. United States Lines, Inc., 111 L.R.R.M. (BNA) 2496, 2496-97 (E.D.N.Y. Aug. 31, 1982); Fed.R.Civ.P. 56(c). Thus, summary judgment will be granted.


 In approximately 1967, Messrs. Palancia and Woods obtained jobs as journeymen plumbers at the Raceway. A member of Local 457 for 30 years, Mr. Woods was promoted to foreman in 1971. Both he and Mr. Palancia were employed continuously by the Raceway from 1967 to 1979. *fn2" In September, 1979, the three-year agreement in effect between Local 457 and the Raceway required that, as a "continuing condition precedent" to their employment, all covered employees -- including the plaintiffs -- obtain a license pursuant to New York State Racing and Wagering Board regulations. N.Y. Admin. Code tit. 9, § 4101.24 (1981). Licenses were renewed annually. *fn3" Messrs. Palancia and Woods had knowledge of this requirement, for in each of the preceding 12 years they had applied for and received licenses. Woods Affidavit, paras. 3-5. Neither plaintiff claims that he possessed or had requested a valid license by September 26, 1982, the apparent date on which the Raceway's personnel manager and director of industrial relations, Walter E. Penny, learned that the plaintiffs had been working without licenses for more than nine months. Woods Affidavit, paras. 3, 6-7. As a result, Mr. Penny informed defendant Friedberg the next day that the Raceway had decided to discharge the plaintiffs. Woods Affidavit, para. 14. At first, Mr. Friedberg protested. But, after conferring with Murray Goldberg, Esq., Local 457's lawyer, he concluded that the union had no choice but to acquiesce in the Raceway's decision. Deposition of Robert J. Friedberg (March 4, 1981), at 12-16; Deposition of Walter E. Penny (March 4, 1981), at 24-25. Messrs. Palancia and Woods were fired on September 28, 1979. Local 457 did not file a grievance on their behalf. *fn4"


 Our starting point is Vaca v. Sipes, 386 U.S. 171, 87 S. Ct. 903, 17 L. Ed. 2d 842 (1967), which sets forth a two-step test for determining whether a union or employer is liable under L.M.R.A. § 301. To establish liability, a plaintiff must show both that (1) the employer breached the collective bargaining agreement and that (2) the union's decision not to pursue the employee's grievance was "arbitrary, discriminatory or in bad faith." Id. at 190-92, 87 S. Ct. at 916-18. Clearly, failure to prevail on the first step obviates the need to consider the second. Thus we begin by deciding whether a breach occurred.

 Messrs. Palancia and Woods contend that the Raceway violated its agreement with Local 457 by terminating them for failure to obtain a 1979 raceway license. Issued on an annual basis, these licenses are required by N.Y. Admin. Code tit. 9, § 4101.24 (1981), which states in part:


(a) No person shall participate in the affairs of any association or corporation licensed by the New York State Harness Racing Commission to conduct harness race meetings at which pari-mutuel betting is permitted as director, agent or employee of such track licensee, unless such person shall have received an occupational license from the commission.


* * *


(c) It shall be the responsibility of each track licensee to prevent any person not holding an occupational license from doing or performing any act or acts at its track.

 Originally filed with the Secretary of State on September 5, 1974, this rule was promulgated under the authority of N.Y. Unconsol. Laws § 8010 (McKinney 1979 & Supp. 1981). *fn5" Article 14 of the collective bargaining agreement in effect at the time of plaintiffs' termination *fn6" tied the Wagering Board's requirements to employment at Roosevelt Raceway in the following language: *fn7"


Each employee covered by this Agreement shall procure such license or permit as required by any such law, rule or regulation, and in the event any license fee is prescribed therefor, the same shall be paid for by each employee covered by this Agreement as a continuing condition precedent to such employment.

 Local 457 maintains that this provision of the agreement, read in light of State regulations, requires the Raceway to discharge employees lacking the requisite license. Whether Article 14 imposes such an absolute duty on the employer is a matter that need not be decided. It will suffice to observe that the "condition precedent" language of this article gives the Raceway the power, at its discretion, to terminate unlicensed employees. Article 5 of the agreement explicitly reserves to management "the right to discharge, suspend and otherwise discipline any employee for just cause." Obviously, "just cause" includes failure to possess a license that the agreement and State regulations require each employee -- as part of his or her own responsibility -- to obtain. Equally as clear, the language quoted from Article 5 reserves to the Raceway the discretion to discharge unlicensed employees, or to discipline them by means of a lesser sanction. In areas traditionally considered the preserve of management, contract ambiguities should be resolved in the employer's favor. Hiring, firing, and discipline constitute one such area. N.L.R.B. v. Jones & Laughlin Steel Corp., 301 U.S. 1, 45, 57 S. Ct. 615, 628, 81 L. Ed. 893 (1937). Cf., Textile Workers Union v. Darlington, 380 U.S. 263, 269, 85 S. Ct. 994, 999, 13 L. Ed. 2d 827 (1965) (plant closing). Moreover, in view of Article 5 of the agreement, it is apparent that the Raceway successfully bargained for the power to determine, within the limits of fundamental fairness, which sanctions to impose.

 This Court's discussion would normally end here, with the conclusion that Messrs. Palancia and Woods had not surmounted the first hurdle of Vaca v. Sipes, supra, were it not necessary to demonstrate that certain facts alleged by plaintiffs -- even if true -- would not forestall the granting of summary judgment. In brief, Messrs. Palancia and Woods appear to claim that the Raceway's long-standing practices modified the agreement and thereby transformed management's actions, albeit in line with the letter of Articles 5 and 14, into a breach of the agreement's altered, unwritten "spirit." Those alleged past practices include:


(1) "at various times and in various ways," distributing blank license application forms to all, or at least to all incumbent, Raceway employees. Woods Affidavit, paras. 4-5 & nn. 1, 4.


(2) Each year from January 1 to April 1, permitting employees to perform their assigned tasks, even though they had not yet obtained a license. Woods Affidavit, n. 2.


(3) Allowing Gene E. Vice, currently maintenance superintendent at the Raceway, to work for nine months one season without a license. Woods Affidavit, para. 9.


(4) Permitting an employee in the Racetrack Security Department to work until July 13, 1979 before obtaining a license. Woods Affidavit, n. 3.


(5) Laying off, rather than discharging, "per diem" workers in certain departments until they had received licenses. Woods Affidavit, para. 13 & n. 4.

 Collective bargaining agreements "are contracts that remain subject to the general principles of contract law." 6 T. Kheel, Labor Law § 26.04[3], at 26-69, 26-70 (1982). Moreover, under L.M.R.A. § 301, this Court has the power to construe Article 14 of the agreement and determine whether the Raceway breached it. Vaca v. Sipes, 386 U.S. at 196, 87 S. Ct. at 920. *fn8" Thus, plaintiffs' contentions might be supported by State common law concepts of modification, waiver and estoppel, or by one of the special procedural safeguards -- for instance, protecting employees from being disciplined for violating rules not regularly enforced -- developed by federal labor arbitrators. See R. Gorman, Basic Text on Labor Law 548-51 (1976); Summers, Collective Agreements and the Law of Contracts, 78 Yale L.J. 525, 573-74 (1969).

 However, after careful consideration of the points alleged by the plaintiffs -- taking them, as we must, to be true, Johnson v. General Motors Corp., 641 F.2d 1075, 1077 (2d Cir. 1981) -- this Court concludes that they neither raise a factual issue precluding summary judgment nor effect, as a matter of law, a modification of the agreement or otherwise cause its breach.

 First of all, Messrs. Palancia and Woods were not exempted from the contractually and legally imposed licensing requirement (or their duty to obtain any required licenses), regardless of how and to what extent the Raceway itself furnished individual employees with blank application forms. Article 14 of the agreement imposes the duty to obtain a license on each employee, individually, and it does so unequivocally. Union members are charged with knowledge of the contents of their collective bargaining agreement. Newgent v. Modine Manufacturing Co., 495 F.2d 919, 86 L.R.R.M. 2468, 2474 (7th Cir. 1974); Tribbett v. Local 7928, United Steelworkers of America, 106 L.R.R.M. 2292 (W.D. Tenn. 1980); Pawlak v. Local 764, International Brotherhood of Teamsters, 444 F. Supp. 807 (M.D. Pa. 1977), aff'd, 571 F.2d 572 (3d Cir. 1978). The plaintiffs may in fact be contending that the Raceway's behavior erased the duty placed on their shoulders. But this claim, too, will not succeed, for it fails to recognize that the duty was not imposed solely by the agreement; it also was imposed by State law. The employer could not effect a waiver of the latter.

 Second, even though the Raceway may have exposed itself to sanctions by permitting unlicensed employees to work on the premises for the first three months of the year, the portions of Mr. Penny's deposition appended to Mr. Woods' affidavit support the conclusion that (1) most employees were licensed by April 1; (2) management actively sought out those who had not obtained licenses by that date; and (3) at no time were a significant number of employees permitted to work well into the calendar year (through July, for instance) without licenses.

 Third, those who did work after April 1 without licenses, and the "per diem" workers laid off but not fired, could not have effected a modification of the Local 457 contract because they were not party to it. Plaintiffs may not claim that their detailed, 13-page collective bargaining agreement was altered by management's unilateral actions vis-a-vis another group of employees covered by a different agreement, if any at all. *fn9"

 Finally, it should be stressed that none of the points raised by the plaintiffs rises to the level of a factual issue. Even if, over the years, a few unlicensed Local 457 members had worked beyond the three-month "grace" period (and no one claims that, apart from the matter before us, this ever occurred), our decision would remain the same. More is needed before common law doctrines or the procedural rules of arbitration will convert management's discretion in a particular case to decline to exercise all of its authority into a waiver for all time of the prerogatives clearly granted to it by contract.

 In summary, we hold that Messrs. Palancia and Woods have been unable to demonstrate a breach of agreement, and therefore have failed to satisfy the first part of the Vaca v. Sipes test. It is unnecessary to consider whether, assuming a breach had occurred, Local 457 did not represent plaintiffs fairly. Cf., Steinman v. Spector Freight System, Inc., 476 F.2d 437, 439 (2d Cir. 1973). *fn10"

 As our discussion shows, plaintiffs have raised no genuine issue of material fact. Fed.R.Civ.P. 56(c). Summary judgment, for the moving defendant, therefore, is appropriate.


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