UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
May 22, 1985
MARINE TRANSPORT LINES, INC., Plaintiff against INTERNATIONAL ORGANIZATION OF MASTERS, MATES & PILOTS, Defendants
The opinion of the court was delivered by: WEINFELD
EDWARD WEINFELD, D.J.
Plaintiff, Marine Transport Lines, Inc. ("Marine Transport" or "the Employer"), instituted this action for a declaratory judgment that its collective bargaining agreement with defendant, International Organization of Masters, Mates & Pilots, AFL-CIO ("the Union"), terminated at midnight June 15, 1984. The central issue raised by plaintiff's claim is the effect of a letter sent by the Union to Marine Transport on April 8, 1984. The Employer claims that, pursuant to the terms of its agreement with the Union, the April 8 letter prevented the automatic renewal of the collective bargaining agreement, resulting in its termination on June 15, 1984. The Union contends that the letter had no effect upon the automatic renewal provision and, hence, the collective bargaining agreement continued in full force and effect after June 15.
The Union interposed three counterclaims addressed to the central question whether or not the agreement terminated on June 15. However, in its fourth counterclaim, the Union alleges a separate claim that the Employer breached the collective bargaining agreement both before and after June 15. Generally, this counterclaim alleges that Marine Transport engaged in conduct violating an express provision of that agreement which prohibits the Employer from influencing members to withdraw from the Union, interfering with internal Union affairs, and undermining the status of the Union as sole bargaining representative for the Employer's licensed deck officers. More specifically, it is alleged that prior to June 15, Marine Transport "prepared a letter to all . . . its . . . officers announcing that it would not" renew the collective bargaining agreement, offering reduced wages and terms and conditions of employment, and encouraging Union members to withdraw from the Union by, among other things, promising to pay any fines imposed by the Union for withdrawal. Defendant alleges that such conduct violated not only Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. 185, but, as alleged in its amended counterclaim, also violated state tort and contract law.
Marine Transport now moves to dismiss the Union's fourth counterclaim upon the ground that the Union has not exhausted its contractual remedies. The Employer contends that the Union has failed to invoke the arbitral process provided for in the collective bargaining agreement for resolution of claimed breaches of that agreement occurring prior to June 15. However, as for acts alleged in the fourth counterclaim to have occurred after June 15, the Employer, based upon its contention that no agreement existed after that date, further argues it is not required to arbitrate any grievance arising after June 15.
The Union concedes that prior to June 15 it was bound by the terms of the collective bargaining agreement then in force, including its arbitration provisions, and that the claimed breach of the collective bargaining agreement by Marine Transport prior to June 15, as contained in its fourth counterclaim, is subject to arbitration. However, in resisting the Employer's motion to dismiss, the Union contends that Marine Transport has waived its right to insist upon arbitration by initiating this litigation as a means of resolving their dispute as to the contract termination date -- a dispute which the Union contends is arbitrable.
Given "the importance of arbitration as an instrument of federal policy" for resolving labor disputes,
waiver of the right to invoke arbitral processes is not to be "lightly inferred."
Defendant bears a "heavy burden" in seeking a determination that its opponent has waived a conceded right to arbitration.
It must show not only that Marine Transport's resort to the courts evidences an intent to relinquish the right to arbitration,
but also that such conduct has been to its prejudice.
Upon the facts presented, defendant has not borne its burden to show a waiver. Marine Transport's resort to the courts does not clearly evidence an intent to relinquish its contractual right to arbitrate claimed breaches of the collective bargaining agreement arising prior to June 15 during the life of the agreement. Marine Transport contends, with some support which the defendant disputes,
that the commencement of this declaratory judgment action is not inconsistent with its insistence on arbitration of the alleged breaches prior to June 15, since the issue whether the April 1984 letter effected a termination of the existing agreement is a legal issue to be decided by the courts, not arbitrators, and that this litigation was commenced accordingly. However, even assuming, as the Union contends, that the Employer's termination claim is one to be resolved by the arbitrator and not by the courts, plaintiff's resort to the courts does not clearly evidence an intent to relinquish the right to arbitrate defendant's claims of breaches that are alleged to have occurred prior to June 15. The Union's waiver argument fails to recognize that plaintiff's termination claim does not put into dispute either the validity of the collective bargaining agreement prior to June 15, or that any issues arising thereunder are subject to the arbitral process. Plaintiff seeks a declaration that, after June 15, the agreement was no longer in force; it concedes, as does the defendant, that prior to that date the agreement remained in full force and effect, and that its arbitration provision must be honored for any claimed breaches arising thereunder. Since the initiation of this litigation is consistent with the existence of the collective bargaining agreement prior to June 15, it is equally consistent with plaintiff's reliance on the arbitration provisions of that agreement as to disputes arising prior to that date.
Nevertheless, the Union insists that by the commencement of this action, the Employer has waived its right to arbitration since it brought suit and, then, changed its position and sought an arbitral forum. However, the Employer has never changed its position with respect to its own claim.
Rather, upon the assertion of defendant's counterclaims, it has made the instant motion seeking to enforce its conceded right under the contract to arbitrate disputes arising prior to June 15. It is important to note that with respect to the Union's counterclaims, plaintiff is in the position of a defendant.
To adopt the Union's argument here would require the Court to find that prior to the time the fourth counterclaim had even been asserted, plaintiff waived its right to seek arbitration, though it has never disputed its contractual obligation to do so.
Even assuming that "[a]s an abstract exercise in logic it may appear . . . inconsistent for a party to participate in a lawsuit . . . and later to ask the court [to order arbitration] . . . the law is clear that such participation, standing alone, does not constitute a waiver."
Prejudice must be shown.
However, defendant has not met its "heavy burden" to show prejudice. In the face of defendant's counterclaims, plaintiff did not delay. It filed a reply asserting its contention that defendant was required to exhaust contractual remedies and proceeded to bring on this motion in timely fashion.
Moreover, defendant has not offered any basis upon which this Court could conclude that there has been substantial litigation of either parties' claims which even implicitly may constitute a waiver by plaintiff of its right to resort to arbitration as to claims arising prior to June 15, 1984. The only judicial consideration of this case appears to have occurred in connection with the Union's successful motion to transfer the litigation from the Eastern District of Pennsylvania to this Court.
Finally, any prejudice defendant claims to have resulted from its "unwilling" appearance in this action could have been avoided if defendant were to have enforced what it now claims to have been its right to bring plaintiff's termination claim to arbitration. Instead, defendant ignored any claimed breach by plaintiff of the arbitration provisions of the collective bargaining agreement and, in fact, affirmatively invoked the resources of the Court in asserting counterclaims. Having ignored its alleged right to have plaintiff's claim arbitrated, the Union may not now rely upon the purported arbitrability of that claim to justify a finding of waiver with respect to the separate claim it initiated and it now seeks to have adjudicated rather than sent to arbitration.
Accordingly, the Court finds that plaintiff has not waived its right to insist that defendant exhaust its contractual remedies with respect to that portion of defendant's fourth counterclaim based upon the Employer's alleged breach of the agreement prior to June 15, 1984. However, defendant contends that, even if plaintiff has not waived its right to arbitration, the amended counterclaims based on state law must remain before the Court, for no agreement was made to arbitrate such claims. Plaintiff responds that defendant's state law claim for intentional interference by the Employer with the contractual relations between the Union and its members is merely derivative of its basic contract claim and is therefore preempted by Section 301 of the LMRA.
In response to plaintiff's motion to dismiss, the Union amended its fourth counterclaim for the purpose of adding a claim based on state tort law. The amendment, however, simply attaches a different legal label to what is clearly a claim for breach of the collective bargaining agreement, a claim cognizable under Section 301 of the LMRA and undoubtedly governed by federal law. No new conduct has been alleged in support of the tort claim. Only conclusory allegations that the same conduct allegedly breaching the collective bargaining agreement also constitutes a state tort have been added.
The collective bargaining agreement provision the Union relies upon in support of its Section 301 claim prohibits the Employer from engaging in activities or assisting or encouraging others to engage in activities calculated to undermine the status of the Union as sole bargaining representative. It also prohibits the Employer from even attempting to influence or persuade any Union member to withdraw or to interfere with internal Union affairs. If, as alleged in the counterclaim, the Employer engaged in the proscribed conduct, it was a clear breach of the contract. The fact that such conduct may give rise to a separate tort under state law does not serve to evade preemption of the claim under federal law. Defendant's "tortious interference" allegations add nothing to its basic factual claim.
In such circumstances, the Court finds that defendant's tortious interference claim is preempted by federal law.
To permit the defendant to avoid grievance and arbitration procedures merely by attaching a tort label to an arbitrable contract dispute would, as the Supreme Court recently stated in Allis-Chalmers Corp. v. Lueck,17 "eviscerate a central tenet of federal labor-contract law."
It was precisely the need to maintain the effectiveness of arbitration that prompted the Court in Lueck to find that a derivative tort claim was preempted by federal law under Section 301 where the collective bargaining agreement imposed the same rights and obligations as would the derivative tort.
Similarly, here, the Court finds that to allow defendant to proceed with "this particular . . . tort, as applied, would frustrate the federal labor-contract scheme established in 301,"
and accordingly finds it is preempted by federal law.
To the extent that defendant's fourth counterclaim is based on conduct arising during the conceded life of the agreement, i.e., prior to June 15, 1984, it is dismissed for failure to exhaust contractual remedies.
However, to the extent that it is based on conduct arising after that date, it will be stayed pending judicial determination whether the collective bargaining agreement remained in force after June 15, 1984. This will serve the interests of the parties, saving them the expense and time involved in litigating in two different forums, and likewise conserve judicial and legal resources. If plaintiff fails to prevail on its declaratory judgment claim, so that the contract was in existence after June 15, 1984, then all claims are subject to arbitration; if plaintiff prevails, then the claims after June 15, 1984 are beyond the reach of arbitration.