The opinion of the court was delivered by: MUKASEY
MICHAEL B. MUKASEY, U.S.D.J.
In prior opinions reported at 752 F. Supp. 116 (S.D.N.Y. 1990) and 829 F. Supp. 665 (S.D.N.Y. 1993), this court found after trial that plaintiffs, former utility workers at the Ozone Park milk processing plant owned and then closed by Liberty Farms, Inc., had proved that defendant William Whelan breached his duty as president of the union that represented them by refusing to enforce a contract provision protecting their right to seek work at the plants to which milk production from the closed plant had been transferred. Those opinions held also that defendant Tuscan Dairy Farms, Inc. breached the collective bargaining agreement (the "Agreement") by failing to enforce the provision in question.
Although Tuscan's principal position at trial was that the subject provision, even as written, did not apply to the Ozone Park plant closing, see 725 F. Supp. at 122-23, it apparently presented "much more focused" arguments to the Court of Appeals that the subject provision had been amended by agreement between the union and Tuscan, and that whatever might have been Whelan's failure to represent the union members fairly, Tuscan was entitled to rely on his agreement to amend the provision so as not to apply to plaintiffs Lewis v. Tuscan Dairy Farms, Inc., 25 F.3d 1138, 1144-45 (2d Cir. 1994).
Accordingly, the case is now before the court on remand from the Court of Appeals to "address the issues raised by Tuscan's arguments that the Agreement was orally amended and that, in any event, it was entitled to rely on Whelan's apparent authority to modify it." 25 F.3d at 1145. Further, if it is determined "that the Agreement was not amended by an oral agreement . . ., or if Tuscan was not reasonably entitled to rely on Whelan's apparent authority, . . . [and as a result that] Tuscan committed a breach of contract," then liability must be apportioned between the parties. Id. at 1146 (emphasis added). Finally, in the course of resolving issues of liability and apportionment, it is necessary to clear up some confusion I caused by issuing what the Court of Appeals understandably saw as "two possibly contradictory findings as to the interrelatedness of [the union's and Tuscan's] conduct." Id.
Although the Court of Appeals left open the possibility of expanding the record in aid of resolving these issues, id. at 1145, the parties have been content to rely on the record as it stood when the case was remanded, and have submitted memoranda arguing the issues on that basis. No party has asked that further testimony or other evidence be received.
For the reasons set forth below, I find that the issue of whether the contract was amended is irrelevant because Tuscan was not reasonably entitled in this instance to rely on Whelan's apparent authority, and that liability between the parties will be joint and several as to both damages and attorney fees.
As noted in the initial opinion finding liability, Liberty Farms was one of 11 affiliated companies owned or controlled by Jules Kotcher that were the subject of a series of purchase contracts signed on June 22, 1987. Those contracts gave Tuscan the exclusive right to the output of the Kotcher companies, referred to collectively herein as Liberty Farms, and obligated Tuscan to buy Liberty Farms within 18 months or when Tuscan terminated the output contract, whichever came first. In addition, Kotcher and other owners and principals of Liberty Farms signed non-competition agreements which Tuscan could enforce even if the output agreement was abrogated. One feature of these agreements not noted in that initial opinion was that Tuscan employed Liberty Farms executives Kotcher and Marc Stern at salaries of $ 300,000 and $ 200,000 per annum, respectively, beginning June 22, 1987. (PX 7, 8) Tuscan also agreed to indemnify Liberty Farms for all liability arising under the Employee Retirement Security Act of 1974, known as ERISA. Tuscan exercised the option to buy Liberty Farms on July 20, 1987. (PX 2-9, 33, 34, 35; see also, PX 35, 38, 40 reflecting payment of ERISA liability) 752 F. Supp. at 117.
Among the entities related to Liberty Farms was Queens Farms, Inc., which operated a milk processing plant in Ozone Park, in the borough of Queens. In February 1987, soon after Whelan commenced his discussions with Caiola and Kotcher, rumors of a possible sale began to circulate at the Ozone Park plant, and grew more persistent by the spring. Eventually, the rumors were discussed at general membership meetings of the local, but Whelan provided no definite information to the members as to whether a sale was imminent. (Tr. 81-84, 89-90) Of particular concern to the employees at Ozone Park was what rights they would have if Tuscan bought the plant, closed it, and then switched production to other Tuscan facilities. General Rule IV C of Schedule C of the master agreement between Local 584 and the milk producers, including Liberty Farms, provided in pertinent part as follows:
C. Consolidation and Mergers
In all consolidations of branches or plants, company craft group seniority shall prevail for the purpose of layoffs, vacations, bidding and in all other usual respects.
If the employer acquires all or any part of a milk business or all or any part of a route in any milk business and merges or consolidates the same with its own business, or handles the same in any other manner, . . . the employer shall be required to assume responsibility for the employment the employees who elect to or who are transferred to the new employer as provided herein who shall enjoy craft seniority, on the basis of the period of ...