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GEOFFREY BEENE, INC. v. NEW YORK COAT

May 2, 1983

GEOFFREY BEENE, INC., Plaintiff,
v.
NEW YORK COAT, SUIT, DRESS, RAINWEAR and ALLIED WORKERS' UNION, AFL-CIO, Defendant



The opinion of the court was delivered by: SOFAER

MEMORANDUM OPINION AND ORDER

 ABRAHAM D. SOFAER, D.J.:

 This is an action by an employer against a union seeking to set aside and vacate an arbitration award. The Union has cross-moved to confirm the award. Federal jurisdiction is founded on § 301 of the Labor Management Relations Act, 29 U.S.C. § 185 (1976), the Federal Arbitration Act, 9 U.S.C. § 10 (1976), and 28 U.S.C. §§ 1337, 2201(1976).

 Plaintiff Geoffrey Beene, Inc. is a New York corporation with its principal place of business in New York City. Defendant Union is an unincorporated labor organization which represents certain employees of Geoffrey Beene. The employer is a member of the Affiliated Dress Manufacturers, Inc. ("Affiliated"), an organization of employers which engages in labor negotiations with unions such as defendant. Affiliated entered into a collective bargaining agreement with defendant Union for a period covering June 1, 1979 to May 31, 1982. The construction of this agreement is at the center of this dispute.

 Around 1972, plaintiff established a new line of clothing, to be produced by a subsidiary called Beene Bag, Inc. Beene Bag was also incorporated in New York, had its principal place of business within New York City, and was a member of Affiliated and therefore bound by the terms of the collective bargaining agreement with defendant. In 1981 Beene Bag ceased its operations. Soon thereafter plaintiff entered into a "licensing" agreement for the production and marketing of the Beene Bag line with Bobbie Brooks Inc., an Ohio corporation doing business in Ohio. Bobbie Brooks is not a party to the collective bargaining agreement.

 On October 26, 1981, the Union filed a complaint against Geoffrey Beene, alleging that Beene had "violated the Collective Agreement by licensing The Beene Bag trade name thereby threatening loss of employment in the employer's inside shop and in the shops of its contractors." (Complaint, Ex. B). The matter was taken to arbitration before the contractually designated arbitrator, Milton Rubin. An evidentiary hearing was held on February 24, 1982, during which both sides were represented by counsel. On March 30, 1982, Rubin issued an interim opinion which ruled that Geoffrey Beene had violated the collective bargaining agreement by entering into its licensing agreement with Bobbie Brooks. Specifically, Rubin found that Geoffrey Beene violated Article Fourteenth of the collective agreement, which prohibits reorganization of the factory without the Union's consent. He also found a violation of Article Twenty-Fourth, Section 5, which prohibits Geoffrey Beene from using contractors outside the Northeastern United States, and Article Thirty-Sixth, a provision that restricts shop movement.

 By letter dated April 16, 1982, Geoffrey Beene requested that Rubin vacate or modify his findings on various grounds. Rubin denied the Beene request to vacate or modify in a second opinion dated September 21, 1982. He specifically found that Beene Bag was a subsidiary of Geoffrey Beene, and that a jobber/contractor relationship existed between the two entities. Rubin further ruled that, in essence, Geoffrey Beene closed the doors of its subsidiary in order simply to replace Beene Bag with another contractor, Bobbie Brooks, that was not bound by the collective bargaining agreement. While the "licensing" agreement between Geoffrey Beene and Bobbie Brooks was not labeled a jobber/contractor agreement, Rubin noted that Geoffrey Beene retained "extensive control over the design of the Beene Bag garments," as well as control over "advertising, sales and production." The arbitrator has not as yet considered a remedy for these violations.

 I. Authority of the Arbitrator

 Plaintiff's first ground for vacating or modifying the arbitrator's decision is that Rubin acted beyond the scope of his authority in scrutinizing the licensing agreement. See § 10 of the Federal Arbitration Act, 9 U.S.C. § 10(d) (1976). Article Thirty-Fifth of the collective agreement provides for arbitration of:

 
any and all complaints, disputes, controversies, claims or grievances whatsoever arising between the parties hereto or between a worker and an employer which relate to or are connected with or involve questions of interpretation or application of any Article of this agreement, or which directly or indirectly arise under, out of, or in connection with or any manner relate to this agreement or the breach thereof, or the acts, conduct or relations between the parties or their respective members . . . .

 Plaintiff's Exhibit A, at 46-47. As defendant notes, this clause is expansive. It plainly provides for arbitration of claims relating to the collective agreement's prohibition against contracting work outside the Northeastern United States. Plaintiff points out, however, that no mention is made of termination of a business or the licensing of trademarks, and argues that those issues are therefore nonarbitrable.

 Plaintiff's suggested approach in evaluating the authority of arbitrators is unacceptably inflexible in light of the so-called "Steelworker's Trilogy." United Steelworkers of America v. American Manufacturing Co., 363 U.S. 564, 4 L. Ed. 2d 1403, 80 S. Ct. 1343 (1960), for example, involved a broad arbitration clause similar to the one in the present case. See 363 U.S. at 565 n. 1. The grievance in the case involved an injured worker who, after being compensated under the assumption that he was "'permanently partially disabled,'" sought reinstatement. The employer refused to arbitrate the request and the union sought an order to compel arbitration. The district court found that the worker was estopped from filing the grievance; the circuit court affirmed, holding that the petition was "patently baseless" and not subject to the collective bargaining agreement. The Supreme Court, however, reversed.

 Emphasizing the policies behind congressional preference for extrajudicial forums, the Court stated:

 
[The courts' function] is confined to ascertaining whether the party seeking arbitration is making a claim which on its face is governed by the contract. Whether the moving party is right or wrong is a question ...

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