The opinion of the court was delivered by: WILLIAM C. CONNER
A class of private plaintiffs and the Equal Employment Opportunity Commission ("EEOC") brought two civil rights actions in 1973 against the Newspaper and Mail Deliverers' Union of New York and Vicinity ("NMDU" or "Union") and more than fifty news publishers and distributors within the Union's jurisdiction. Both suits charged that the Union, with the acquiescence of the publishers and distributors, had historically discriminated against minorities, and that the structure of the collective bargaining agreement, combined with nepotism and cronyism, had perpetuated the effects of past discrimination in violation of Title VII of the Civil Rights Act of 1964. Each lawsuit sought an affirmative action program designed to achieve for minorities the status they would have had in the newspaper delivery industry but for the alleged discriminatory practices.
On September 19, 1974, then-District Judge Lawrence W. Pierce issued an Opinion and Order approving a settlement between the parties and incorporating the Settlement Agreement in a Consent Decree, familiarity with which is presumed. See Patterson v. Newspaper and Mail Deliverers' Union, 384 F. Supp. 585 (S.D.N.Y. 1974) aff'd, 514 F.2d 767 (2d Cir. 1975), cert. denied, 427 U.S. 911, 96 S. Ct. 3198, 49 L. Ed. 2d 1203 (1976). The Settlement Agreement implements an affirmative action program which modifies the hiring procedures for newspaper deliverers under the industry-wide collective bargaining agreement. Under the Consent Decree, each employer maintains a work force of regular situation holders for its minimum delivery needs. To accommodate fluctuations in circulation, the publishers are permitted to supplement their work force with daily shapers.
The Settlement Agreement also established an Administrator, appointed by the Court, to implement the provisions of the Consent Decree and supervise its performance. The Consent Decree authorizes the Administrator to hear claims concerning violations of the Decree. Appeals from his decisions are heard in this Court.
Pursuant to the Settlement Agreement, defendants Magazine Distributors, Inc. ("MDI") and MDI Distributors, Limited Partnership (the "Partnership") seek review of a determination by Administrator William S. Ellis, Esq. (the "Administrator"), denominated "Claim 274." The Court has reviewed the memoranda and exhibits relied upon by the Administrator, as well as the arguments submitted to this Court by the parties. For the reasons set forth below, the Administrator's decision is affirmed.
Imperial News Co. ("Imperial"), a wholesale distributor of magazines and paperback books for markets in Nassau, Suffolk, lower Westchester and in parts of Fairfield County, Connecticut, was a party defendant in Patterson and a signatory to the Settlement Agreement. For many years, Imperial conducted its business out of a facility in Melville, New York. NMDU represented some, but not all, of the drivers and warehouse employees at Imperial. Of its 96 NMDU-represented employees, 19 (or 19.8% of the total) were minorities.
MDI is a Connecticut-based wholesale distributor of newspapers and periodicals and has been in business for over thirty years. Unlike Imperial, MDI is neither a party defendant in Patterson nor a signatory to the Settlement Agreement. Prior to December 1990, MDI operated exclusively out of Connecticut and competed with Imperial in Long Island from its Connecticut base.
In November 1990, Local 917 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, AFL-CIO ("Local 917"), was recognized as the exclusive bargaining representative of MDI's drivers and warehousemen based in Plainville, Connecticut. The MDI-Local 917 collective bargaining agreement contained an "accretion" clause, wherein MDI agreed that if it expanded its business or opened a new facility, MDI employees at the new locations would be covered by Local 917. Also in November 1990, MDI leased a site in Hicksville, New York. In December 1990, MDI hired drivers for its Hicksville site, and recognized Local 917 as its bargaining representative.
On January 23, 1991, Imperial terminated all of its employees and ceased operations. On March 8, 1991, Imperial and the Partnership entered into an asset purchase agreement (the "Purchase Agreement"), with the latter purchasing substantially all of Imperial's assets. Paragraph 1.1 of the Purchase Agreement provided, inter alia, that:
MDI shall purchase from Imperial, the following assets of Imperial . . . subject to the MNC Lien, but otherwise free and clear of any liabilities and obligations with respect thereto, whether absolute, contingent or otherwise, and free and clear of all liens, claims, judgments, pledges, mortgages, options, interests, or other encumbrances of any kind[.]
Paragraph 1.3 of the Purchase Agreement provided that MDI would not assume any liability for, inter alia, Imperial's employment agreements, collective bargaining agreements, or other labor-related liabilities or obligations. The Purchase Agreement was conditioned on Imperial commencing a voluntary bankruptcy proceeding and on the entry of a Bankruptcy Court order approving the Purchase Agreement.