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NEW YORK AIR BRAKE CORP. v. GENERAL SIGNAL CORP.

October 7, 1994

NEW YORK AIR BRAKE CORPORATION, Plaintiff,
v.
GENERAL SIGNAL CORPORATION; INTERNATIONAL ASSOCIATION OF MACHINISTS & AEROSPACE WORKERS LOCAL NO. 761; INTERNATIONAL ASSOCIATION OF MACHINISTS & AEROSPACE WORKERS LOCAL NO. 761A, Defendants.


Hurd


The opinion of the court was delivered by: DAVID N. HURD

REPORT-RECOMMENDATION

I. Introduction.

 This matter was referred to the undersigned by District Judge Frederick J. Scullin, Jr., to hold an evidentiary hearing regarding the so-called "Good Friday Meeting," and to file a Report-Recommendation addressing the motions at issue. Presently before this Court are three motions: (1) a motion by plaintiff New York Air Brake Corporation ("New York Air Brake") to confirm an arbitration award and enforce the terms of an agreement entered into on April 9, 1993; (2) a motion by defendant International Association of Machinists & Aerospace Workers ("IAMA") Local 761A ("Local 761A") for summary judgment confirming the arbitration award and enforcing the agreement entered into on April 9, 1993; and (3) a motion by defendant IAMA Local 761 ("Local 761") to remand the decision of the arbitrator back to arbitration for further proceedings.

 A hearing was conducted in Syracuse, New York, on July 21, 1994. Seven witnesses were examined during the hearing. Paul M. Sansoucy, attorney with Bond, Schoeneck & King, who has represented plaintiff since 1990; Ernest J. Clemons, President of Local No. 761A in 1992 (filed initial grievance); Steven A. Fayette, Vice President of Local No. 761A on April 9, 1993; Daniel G. Brownell, Vice President of Human Resources at New York Air Brake; Ronald H. Dwyer, Labor Relations Manager for Knoor Air Brake Company, parent to New York Air Brake; Thomas Madill, President of Local No. 761 on April 9, 1993; and Arthur R. Gamble, Directing Business Representative for IAMA with District 137, all testified at the hearing.

 II. Facts.

 Local No. 761 is the collective bargaining representative for production and maintenance workers at New York Air Brake, and the two are parties to a collective bargaining agreement effective from March 1, 1992, through April 9, 1995. Local No. 761A is the collective bargaining representative for production and maintenance workers formerly at co-defendant General Signal Corporation ("General Signal") Dynapower/Stratopower plant in Watertown, New York.

 New York Air Brake is a division of General Signal. Local No. 761, General Signal, and Local No. 761A, were parties to a Supplemental Agreement dated January 15, 1991, which, among other things, provided certain transfer rights to employees of both companies should either company close its plant or move out of Jefferson County, New York, prior to April 8, 1992.

 On February 14, 1992, General Signal announced that it would relocate to a new facility in the South Carolina or Georgia areas, and that such relocation would begin in June 1992, and be completed by October 1992. That same day, New York Air Brake apparently announced its position that the transfer rights of General Signal employees affected by the relocation of the plant had not been triggered by General Signal's announcement. *fn1"

 On March 6, 1992, Local No. 761A presented a grievance to New York Air Brake and General Signal on behalf of all employees affected by the announced relocation. The grievance requested arbitration, complaining that New York Air Brake's refusal to allow affected employees an opportunity to transfer to New York Air Brake violated paragraph three of the Supplemental Agreement. That same day, New York Air Brake initiated a state court action seeking a declaratory judgment as to their rights under the Supplemental Agreement. On March 20, 1992, the defendants jointly removed the action to federal court.

 In its answers, Local Nos. 761 & 761A counterclaimed to compel New York Air Brake to submit to final and binding arbitration. The parties agreed by stipulation, and Judge Scullin ordered, the parties to submit to binding arbitration "on the issue of the meaning and application of the . . . Supplemental Agreement with respect to the rights of affected bargaining unit employees of defendant General Signal Corporation to transfer to New York Air Brake pursuant to Section 3 of said agreements." (Stip. and Ord., June 5, 1992). After arbitration proceedings, the arbitrator issued a decision and award dated March 30, 1993, and found that New York Air Brake did violate the Agreement and held that it must offer displaced General Signal employees positions on a seniority basis, plus back pay.

 The issue before this Court is whether the meeting on April 9, 1993, resulted in a settlement of the case, a modification of the Arbitrator's award, a plan to implement the award, or no agreement at all.

 III. Discussion.

 A. Recommendation.

 This action was removed from state court and brought to Federal District Court based upon the existence of a federal question under § 301 of the Labor-Management Relations Act. (Def. Not. of Removal, March 20, 1992); See also 29 U.S.C.A. § 185 (West 1978). The District Court held jurisdiction pursuant to that statute as well as jurisdiction to review the collective bargaining agreement, determine if arbitration was required, and send the suit to arbitration. Int'l Ass'n of Heat and Frost Insulators and Asbestos Workers Local 66 v. Leona Lee Corp., 434 F.2d 192, 194 (5th Cir. 1970). The District Court sent the controversy to arbitration, retaining jurisdiction pending arbitration by means of the language of the stipulation and order to arbitrate, executed on June 5, 1992, which stated: "The United States District Court for the Northern District of New York (Hon. Frederick J. Scullin, Jr.) will retain jurisdiction of this action during the pendency of the arbitration proceeding for the limited purpose of effectuating this stipulation and order to arbitrate." (Stip. and Ord., June 5, 1992). *fn3"

 The three motions enumerated above focus upon the primary question underlying the resolution of this action - what was the purpose and result of the Good Friday Meeting? The meeting allegedly resulted in an agreement that was reduced to a writing, but never signed by the parties. *fn4" It was submitted in the form of a court order for court approval, but was ultimately rejected by one party. The agreement stood upon an apparent oral agreement allegedly consummated with handshakes at the termination of the Good Friday Meeting. It must be determined if there was an agreement, and if so, whether the agreement was intended to settle the case and override the arbitration award, modify it, or simply implement it.

 It must first be determined whether the parties possessed the authority to settle this grievance subsequent to a final and binding arbitration award being issued. For without that authority, even an intended and clearly expressed settlement could not survive.

 The language of the collective bargaining agreement made explicit reference to the parties' authority to settle disputes, stating, "Nothing contained herein shall be construed as preventing the Company and the Union from settling by mutual agreement prior to final decision, any dispute or grievance submitted to arbitration hereunder." (Def. 761A's Cross-Mot. for Sum. J., Ex. A at 24; Agreement Between New York Air Brake and the International Association of Machinists & Aerospace Workers, Lodge No. 761, District 137, Effective April 10, 1990).

 No "final decision" existed because at the time of the Good Friday Meeting, the award had not yet been confirmed by a federal court. "Under the Federal Arbitration Act, decisions by arbitrators must be confirmed by a federal court in order for it to be enforceable. Indeed, an arbitrator's decision is not final until it is confirmed." Hatzlachh Supply, Inc. v. Moishe's Elec., Inc., 848 F. Supp. 25, 28 (S.D.N.Y. 1994) (citations omitted) (citing Morelite Constr. Corp. v. New York City Dist. Council Carpenters Benefit Funds, 748 F.2d 79, 82 (2d Cir. 1984)); contra Florasynth, Inc. v. Pickholz, 750 F.2d 171, 176 (2d Cir. 1984) ("The confirmation of an arbitration award is a summary proceeding that merely makes what is already a final arbitration award a judgment of the court.").

 Finally, it is inherent in the adversarial system in which this country operates, that parties to litigation or dispute hold the authority to settle that litigation or dispute outside the confines of the court at any time before, during, or after the conduct of the proceedings. Basic contract principles mandate such a view. Judicial economy mandates such a view. Justice mandates such a view. Contract principles point to the view that any executory contract may be modified or rescinded, upon mutual agreement, even on the eve of execution. Why then should these three parties be bound to a decision not yet final, which all mutually agree cannot stand? Likewise, binding parties to a mutually unacceptable decision or award and virtually guaranteeing future litigation time and expense flies in the face of judicial economy. Finally, where parties to a dispute have the capacity and wherewithal to reach an acceptable solution, and neither views the system's attempt at a solution to be acceptable, to then hold the parties to such an attempt would do a double injustice. For in such a situation, not just one party or another, but all, fail to achieve justice.

 In addition, all of the participants in the Good Friday Meeting (see footnote 2) had express or implied authority to settle and bind their principals to an agreement. The by-laws of Local No. 761 - the only party opposing the implementation of this agreement - expressly provide for a general committee, comprised of the president, vice president, and one committeeman, "to adjust all grievances that may arise between members and the foremen or other officials of the company. They shall have the power to make settlement in all cases where it is possible to do so." (Def. Local 761A Mem. of Law at 23). "A union does not act unfairly when if (sic) fails to consult with or advise a grievant of its bargaining activities, nor in the legitimate exercise of its discretion, need it obtain the employee's consent before settling a grievance." Caputo v. National Ass'n of Letter Carriers, 730 F. Supp. 1221, 1230 (E.D.N.Y. 1990) (cites omitted). The representatives participating in the Good Friday Meeting were the duly elected or appointed officers and attorneys for each party and possessed the authority to settle this dispute.

 Neither is there a need for a settlement agreement to be in writing, signed by the parties. The Second Circuit, in determining whether an oral settlement agreement was enforceable, stated:

 
Under New York law, parties are free to enter into a binding contract without memorializing their agreement in a fully executed document. This freedom to contract orally remains even if the parties contemplate a writing to evidence their agreement. In such a case, the mere intention to commit the agreement to writing will not prevent contract formation prior to execution.

 Winston v. Mediafare Entertainment Corp., 777 F.2d 78, 80 (2d Cir. 1985), cited in Grupo Sistemas Integrales De Telecomunicacion S.A. De C.V. v. A.T. & T. Communications, Inc., No. 92- CV-7862, 1994 WL 463014 at *2 (S.D.N.Y. Aug. 24, 1994). The Second Circuit outlined four factors to examine in determining the intent of the parties to be bound without a signed writing. They are: (1) whether there was an express reservation of the right not to be bound in the absence of a writing; (2) whether there has been partial performance of the contract; (3) whether all of the terms of the alleged contract have been agreed upon; and (4) whether the agreement at issue is the type of contract usually committed to a writing. Winston 777 F.2d at 80. None of the four factors enumerated call for any conclusion but that a contract was entered into by the parties.

 The Supreme Court in Retail Clerks International Assoc., Local Nos. 128 and 633 v. Lion Dry Goods, Inc., 369 U.S. 17, 7 L. Ed. 2d 503, 82 S. Ct. 541 (1962), dealt with a labor dispute allegedly settled when the parties, through a mediator, compiled an unsigned "Statement of Understanding" containing the points of settlement. In determining whether this agreement fell within the definition of "contract" so as to be enforceable under § 301(a) of the Labor Management Relations Act, the Court stated "it is enough that this is clearly an agreement between employers and labor organizations significant to the maintenance of labor peace between them. . . . 'Federal courts should enforce these agreements on behalf of or against labor organizations ...


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