Local Union No. 721, United Packinghouse, Food & Allied Workers, AFL-CIO v. Needham Packing Company

PETITIONER:Local Union No. 721, United Packinghouse, Food & Allied Workers, AFL-CIO
RESPONDENT:Needham Packing Company
LOCATION:United States District Court for the Eastern District of Louisiana

DOCKET NO.: 102
DECIDED BY: Warren Court (1962-1965)
LOWER COURT:

CITATION: 376 US 247 (1964)
ARGUED: Feb 20, 1964
DECIDED: Mar 09, 1964

Facts of the case

Question

Audio Transcription for Oral Argument – February 20, 1964 in Local Union No. 721, United Packinghouse, Food & Allied Workers, AFL-CIO v. Needham Packing Company

Earl Warren:

Number 102, Local Union 721, United Packinghouse, Food and Allied Workers, Petitioner, versus Needham Packing Company.

Mr. Watt.

Richard F. Watt:

If the Court please.

This comes to this Court on a petition for writ of certiorari to the Supreme Court of Iowa.

That court affirmed a ruling of the trial court, Circuit Court of Woodbury County, Iowa, to the effect that the Union’s participation or the employees’ participation in a walkout can be effect of waiving the right of the Union to require the employer to arbitrate discharges which arose in the context of the walkout.

As the matter came to the Iowa Supreme Court, it came there by way of an interlocutory appeal from a ruling of the trial court under a rule of the Iowa Rules of Civil Procedure, Rule 105, which is a rule that appears to be designed to make it possible for rulings of law, final determinations of law to be made in advance of disposition of the entire case where the facts which raise the issue of law are not contraverted.

As the case commenced, it was a proceeding by the Union to require the employer to arbitrate grievances which the Union had presented under the provisions of the collective bargaining agreement.

There were two grievances.

One was the discharge of one employee and the second grievance had to do with the discharge of approximately 190 other employees.

Insofar as the record discloses the facts from which these disputes arose, it discloses a set of facts very similar to the facts in the Enterprise Wheel case which was before this Court in 1960.

There seems to have been a dispute between an employee and someone in management.

That employee was discharged and then a significant number of other employees walked off the job, presumably in sympathy in protest.

So that, the question that is presented here is whether or not the conduct of the employees, and possibly of the Union as well, precludes the Union from requiring the employer to arbitrate the disputes under the provisions of an arbitration clause which is certainly as broad as the arbitration clauses that were before this Court in the Steel Workers cases.

The arbitration clause contains the language “disputes with reference to the proper interpretation or application of the provisions of the contract.”

It’s our contention that, notwithstanding what appears to have been possibly illegal conduct under the contract by the employees and the Union, that the question of the discharges, whether they were for just cause, is a question which should be decided by the arbitrator.

Arthur J. Goldberg:

(Inaudible)

Richard F. Watt:

I would say, in the factual situation that you put, Justice Goldberg, that the employees would be required through their Union to submit that matter to arbitration.

I think —

Arthur J. Goldberg:

Has that been authorized (Inaudible)

Richard F. Watt:

I don’t think they could strike without running a serious risk of violating the no-strike clause unless, first, they had endeavored, rather diligently, to have the matter determined by an arbitrator.

Arthur J. Goldberg:

In other words you (Inaudible)

Richard F. Watt:

I would say that there is room but I think it would be an extraordinary and very exceptional case.

The only decision that I think I would be inclined to agree with, which represents an instance in which the relationships between the parties had deteriorated to the point where it was probably proper to say that no contract remained, was Judge Nordbye’s opinion in the Minnesota Joint Board case.

I don’t think that situation is presented here, nor do I think that that situation is the situation that post in your hypothetical question.

Arthur J. Goldberg:

Your point here, I think, is that even if there’s room for material to be filed (Inaudible)

Richard F. Watt:

I don’t think that there was, no.

That would be my point, yes.I think perhaps the problem is created for the courts by the somewhat ambiguous meaning of the term “arbitrability”.

I’m sure that there is no question but what initially the term “arbitrability” is a — an issue which has to be considered by the court.

But, as I understand the decisions of this Court, it has instructed the lower courts that they are simply to concern themselves with the question of whether or not the dispute presented appears to be one on the face of the contract and the face of the arbitration clause that the parties bargain should go to the arbitrator.

Here, however, we have an additional reason urged, not on the face of the contract, an additional reason urged why these grievances should not go to arbitration, the reason being the claim to misconduct of the Union.

Richard F. Watt:

It seems to me that that is something in the nature of an affirmative assertion or allegation, perhaps even an affirmative defense, which for a Court to decide would necessitate the hearing of evidence, a consideration of the facts and circumstances surrounding the strike, the consideration to what extent the officials of the Union participated in the walkout, either encouraged it or stood by and did nothing about it.

It seems to me that if the contract, in its wording, in the arbitration clause appears to be such that the dispute hear a discharge should go to arbitration, that that issue of arbitrability, properly a judicial question, can be determined without the hearing of any evidence which may bare upon what I’ve described as in the nature of an affirmative defense to it.I would say that when the matter goes to the arbitrator, it would be perfectly proper at that point for the employer to assert that, by reason of the wrongful misconduct of the Union, it should not have the benefits of arbitration in that particular case.

Or, another type of affirmative assertion that might be made is that, notwithstanding what appears to be the language of the arbitration clause, the history of bargaining over the years indicates quite clearly that the particular kind of dispute which has arisen is one that the parties previously had come to an understanding, although not expressed in writing, should not be heard by the arbitrator.

Arthur J. Goldberg:

The arbitrator will hear your argument (Inaudible)

Richard F. Watt:

I think the arbitrator could hear and pass upon the very argument which the respondent is making in this Court and wants the courts to pass upon, and I think it would require — before the issue could be decided, it would require a full hearing of the evidence and the facts and circumstances surrounding the events which lead to the discharges.

The difficulty, it seems to us, in having a court pass on these issues, as the Iowa courts did, without hearing evidence but simply on the face of the pleading is it’s extremely difficult for a court to consider as a defense to the question of arbitrability the facts and circumstances surrounding the strike without coming perilously close to determining whether or not there was just cause for discharge.

I believe, conceptually, you can separate the two issues.

You can say that one issue is simply the question as to whether or not the Union conduct is of such a nature that the contract relationship has deteriorated to the point where the employer is no longer bound to arbitrate the dispute.

I think that is an issue which could be posed and, apart from the evidentiary problems, probably could be passed on by a court, but what appears to us to be the inherent difficulty of the question is that once a court enters upon that, I think it is extraordinarily hard for it not virtually to decide whether or not there was just cause for the discharge.

I say questions conceptually are separate, but the evidence and the arguments which would go to the decision of the two questions are so closely related that once a court determines that it may properly decide whether this particular affirmative defense to the petition to seeking arbitration is a good one or not, it almost inevitably is going to be entrenching upon the question of whether or not the discharges which are the heart of grievances were for proper cause under the terms of the contract because, obviously, in some situations, arbitrators will hold that employees walking off the job without proper justification may be discharged and that that action of employees constitutes just cause.

But, that question is so closely related to the question which is here urged as a defense to arbitration at all.

Is so closely related — these two questions are so closely related that I do not see how a court, mindful of the decisions of this Court as to the limited function that the Court is to engage in, can decide one question with almo — out almost inevitably deciding the other.

So that, it seems to me, that perhaps the problem can be helped some and the issue clarified some for the guidance of lower courts.

If it is recognized that, initially, arbitrability is for the court to decide on the face of the contract and the language which the parties have used but that, once the matter goes to the arbitrator, there may be much more detailed considerations which the arbitrator may consider and which may lead the arbitrator to conclude that, in this particular circumstance, the conduct of one party or the other precludes it from having the merits of the — of the grievance finally determined by way of arbitration, so that there may be two levels of the issue of abitrability.

Arthur J. Goldberg:

(Inaudible)

Richard F. Watt:

That’s correct.

Arthur J. Goldberg:

(Inaudible)

Richard F. Watt:

No, I don’t think that it would be because, I think, there is — there are two separate questions.

One of which, obviously, would be within the exclusive jurisdiction of the Labor Board, namely, whether there was an unfair labor practice.

Nowe, the second question might well be whether there had been a violation of the contract.

And, I think those two questions are separate even though the facts and circumstances bearing on the two questions may be very, very similar, if not identical.

As I understand respondent’s argument here, it is that we do not have a situation comparable to that in Drake Bakeries because the arbitration clause here is narrower and, conceitedly, it is.

In Drake Bakeries, of course, the arbitration clause was so broad that this Court held that the employer had agreed by the provisions of that arbitration clause to have to go to arbitration even the question as to whether the Union should be required to pay damages for breach of contract by engaging in a strike.

There’s no question that the arbitration clause here does not go nearly so far.

The arbitration clause here, first of all, is concerned with the interpretation of the contract, and the only kind of issues which can go to it are those which the Union asks to go to arbitration.

Byron R. White:

Is the argument broad enough to cover the question of whether or not a strike — whether or not the contract allows the employer to repudiate for an unauthorized strike?

It’s a matter of contract interpretation.

Richard F. Watt:

I — I think it would if the issue arose in the context of a grievance.

Byron R. White:

Yes, which this one did.

Richard F. Watt:

Which this did.

Byron R. White:

It might —

Richard F. Watt:

It —

Byron R. White:

— be different — It would be a different case if this employer were — had brought a suit for damages and the Union countered and asked a stay in order to send the — to put the damage claim on arbitration.

Richard F. Watt:

That’s correct.

If it arose in a different context, it might be an issue which would not probably be one to go to the arbitrator.

But, here, as a matter of fact, it is quite clear, since the employers filed a counterclaim and since there is no question but what the employer has a right to have that counterclaim heard by the court and determined, that the employer retains his judicial remedy for any breach of contract by the Union and he has a right to sue, under Section 301, and pursue that remedy.

And, he has not given up that remedy by virtue of this particular contract, whereas, in the Drake Bakeries case, he had agreed to give up a court remedy for that type of violation.

Consequently, in this case, it seems to me that the reasoning applicable in the Drake Bakeries case is just as strongly in favor of having this issue go to arbitration, the grievances here, as in the Drake Bakeries case, not withstanding the difference in the two arbitration clauses and for this reason.

In this case, the employer retains his remedy.

He has filed a counter claim asking for damages in the court.

That counter claim is not proceeding at the present time because all proceedings in the Iowa court have been stayed, pending the determination of these issues, so that he has not restricted himself to have questions as to the violation of contract by the Union which may lead to his right to damages.

He still has his court remedy and is not compelled to have that question heard by the arbitrator.

So that, when the respondent indicates that, by reason of the narrower arbitration clause here, it is not broad enough to concern itself for the question of walkouts and strikes amounting to substantial breach, I think it is necessary to clarify that assertion and indicate that, in part, what the respondent says is correct but, impart, what he says is incorrect.

He is correct insofar as he is interpreting this contract and this arbitration clause as not requiring the employer to arbitrate any claim for damages he may have by reason of the conduct to the Union.

But, it seems to us, he is incorrect insofar as he indicates that this arbitration clause would not permit the arbitrator to consider whether or not the strike, action or walkout action by the Union, precluded the type of remedy which the Union seeks to arbitration.

I think it’s necessary to consider in what context the issue was to be decided and, if it’s in the context to have a claim for damages, then, obviously, that should be heard by the court.

If it’s in the context of a claim that employees were improperly discharged, then, it seems to me, the issue is properly one here for the arbitrator.

Arthur J. Goldberg:

(Inaudible)

Richard F. Watt:

On the pleadings, the Union denied that there was a strike, admitted that there was a walkout.

I think, there — there may be a rough and ready distinction between the two in this respect.

Byron R. White:

Suppose it had been —

Richard F. Watt:

That —

Byron R. White:

called or authorized.

Richard F. Watt:

That it called or authorized or encouraged the strike.

That is correct.

It admits that a substantial number of employees walked off.

There are two questions —

Potter Stewart:

You started to say there was a rough —

Richard F. Watt:

I’m sorry.

Potter Stewart:

— and ready distinction between —

Richard F. Watt:

A rough and ready distinction between them.

I thought I had touched upon that in response to Mr. Justice White’s question.

A walkout, as admitted by the Union, would simply be the factual situation in which a number of employees left their places of work and went out on the street and left the plant.

Potter Stewart:

But the Union continues to deny that it called or authorized such a walkout.

Richard F. Watt:

That it called or authorized that walkout.

That’s correct.

And, I would say that if the Union had called or authorized it, that it would be more proper to use the term “strike” and that’s why — what I meant by saying there’s a rough and ready distinction.

(Inaudible)

Richard F. Watt:

I would concede, Your Honor, that there were might be a stronger argument against arbitration, but it would be our position that even if there were a strike here, given the period of time covered by the events as disclosed by the record, the policy of the Federal Labor laws, as interpreted by this Court, would be better served by having the question of the discharges go to the arbitrator and let him decide whether there was any justification in the context to the situation here for what the employees did rather than to have it be decided as a kind of threshold question when the issue of arbitrability comes out.

Byron R. White:

Well, do you or don’t you say that the — that the fact that the Union denies having called or authorized the strike is, of itself, enough to require arbitration?

Richard F. Watt:

I would say that it’s enough to require arbitration but I would not want to be placed in the position of saying that, even if that had engaged in what could more properly be called a strike and had authorized some such action, that there should be no arbitration because I think that, in the context and the actual conditions which prevail in the industry today, there are many situations, very short-lived strikes, and the issues which developed in those strikes and around those strikes are probably better solved through arbitration than they are through court proceeds.

Arthur J. Goldberg:

So, is your argument (Inaudible) involve collective bargaining and suppose they didn’t (Inaudible)

Richard F. Watt:

I agree with that, except, as I indicated, I think there may be some few extreme cases in which — such as the one I would suspect that Judge Nordbye was concerned with in Minnesota in which the relationship had completely collapsed and there was no possibility of it’s ever coming back together again.

Arthur J. Goldberg:

(Inaudible)

Richard F. Watt:

If that is the — if that notice is what you are referring to, has to do with the communication that was sent about four days after the walkout, and I believe that that is, the employer does interpret that as an indication that he is, regarding the activity of the Union as such, that he is justified in completely terminating all obligations under the contract, and that occurred four days after the walkout.

Arthur J. Goldberg:

(Inaudible)

Richard F. Watt:

Yes, I believe they are and our answer to that would be that, notwithstanding the position taken by the company, whether it had the right to this so as to cut off all rights of the employees is a matter that should go to the arbitrator.

Arthur J. Goldberg:

Well, from the application —

Richard F. Watt:

Of the —

Arthur J. Goldberg:

Application form.

Richard F. Watt:

Correct.

That would be our position.

Now, preliminarily, there are two issues which have been raised which I would like to comment very briefly on.

The respondent contends that the judgment of the Iowa court is not a final judgment and, therefore, is not reviewable by this Court under Section 1257.

It seems to me that, in the practical terms and using the practical test which this Court has employed in many cases, the judgment below is final.

The only thing that remains undisposed off is the respondent’s counter claim for damages.

Now, admittedly, that counter claim for damages, if and when it goes to trial, will involve a lot of questions that are very similar to the questions that would be involved before an arbitrator in connection with these grievances but, so far as the right of the petitioner to obtain arbitration is concerned, the judgment of the Iowa court puts an end to that for all practical purposes, except in the remote circumstance that respondents — respondent suggests, namely, after a trial of a counterclaim.

If they were determined that the petitioner had not violated the no-strike clause, then the petitioner could ask the Iowa court to change its and reopen its decision and, at that point, perhaps order arbitration.

I agree that that is a hypothetical possibility but it’s so remote as a practical matter and it’s so remote in time that, if arbitration were to be ordered some-two or three years from now, after a trial of counterclaim, it seems to me, would have no work whatsoever.

And, furthermore, as far as any further proceedings in the Iowa courts are concerned, we took the matter to the Iowa Supreme Court.

Richard F. Watt:

There’s no place else in Iowa to go, so that it is a determination of an issue in this case, finally, by the Highest Court in Iowa that can pass on the matter.

Secondly, there is, urged in the respondent’s brief, the contention that there are certain undenied allegations in an amendment that — or an answer that respondent filed to an amendment to the petition.

I endeavor to cover that matter in the brief.

Under Iowa law, where the issues are properly framed by a complaint or a petition and an answer, a reply is not necessary.

A reply or a responsive pleading following an answer under Iowa law is necessary only if the answer raises new issues.

And, in connection with the strike, the circumstances surrounding the alleged strike, the number of people who left their jobs, the matter of the picket line, and so on, those issues were all properly raised and fully raised by the pleadings prior to the amendment which respondent asserts we did not respond to or did not answer.

So that it would be our contention that, on the pleadings, no further pleading was necessary and that this Court could not properly take as undenied the allegations that were contained in the amendment to the answer which the respondent filed.

There is a — the Iowa Supreme Court never dealt with that because the matter was not raised at any point in the proceedings prior to the brief filed by respondent in this Court.

We urge that the judgment of the Iowa Supreme Court be reversed.

Earl Warren:

Mr. Scanlan.

Alfred L. Scanlan, Jr.:

Mr. Chief Justice and members of the Court, before addressing myself to the three points that are involved this case, namely, the jurisdictional issue, then the merits, and then the final question touched upon by Mr. Watt whether the record in this case permits a factual basis for the legal conclusions reached by the Supreme Court of Iowa, I would like briefly just to touch on some points that had been covered in part but perhaps not fully illuminated by Mr. Watt’s presentation.

First, and there’s no argument here, the Union has conceded below, concedes here, and Mr. Watt again has conceded in argument the employer’s right to sue over the breach of the no-strike clause.

That in a breach of the no-strike clause as a concept, at least as he put it, is a non-arbitrable matter.

Thus, from the beginning, we don’t have the situation that was presented in Drake and in Atkinson.

Byron R. White:

You assume then this is the non-arbitrable matter?

Alfred L. Scanlan, Jr.:

Yes, that’s — the claim for damages, Mr. Justice White, for breach of the no-strike clause is a non-arbitrable matter.

Therefore, we don’t have the problem this Court had to wrestle within Drake and in Atkinson, for that matter, to determine whether the breach was included under or out of the arbitrational clause.

Also, as in Atkinson, and unlike Drake, only the Union could petition for a grievance.

And, finally, the — and this point I don’t think has been touched upon, the no-strike clause in this case is much broader than the no-strike clause in Atkinson.

In Atkinson, actually, the Union had a right to strike over matters that were not subject to the grievance procedure, provided they gave notice.

Here, on the record at pages 8 and 9 where the no-strike clause is set forth, it is perfectly clear that it bars all strikes and walkouts and work stoppages.

Finally, with respect to the no-strike clause, and I think this is important in light of the shaky denials that the Union persists in that they didn’t call, sanctioned, or support the strike, it doesn’t make any difference for this Court’s determination of this case because the no-strike clause finds both the employees and the Union, it says it has agreed that, during the period of the agreement, the employee shall not engage in and the Union shall not call or sanction any slowdown, work stoppage, or strike.

And, we’re talking here about the reinstatement of the employees who walked out, so whether or not the Iowa court went beyond the permissible realm of judicial notice and pierce the pleadings to find that the Union was supporting the strike, it doesn’t make any difference.

We’ll deal with it as a walkout by these 191 employees.

Arthur J. Goldberg:

Mr. Scanlan, (Inaudible)

Alfred L. Scanlan, Jr.:

In the production gang?

Arthur J. Goldberg:

(Inaudible)

Alfred L. Scanlan, Jr.:

I — I believe, Your — Mr. Justice Goldberg, it isn’t in the record but I think it was 205.

I think, the first day, they all walked out but a few came back.

Now, there’s no question here that the walkout was over an economic dispute, a matter that was subject to grievance.

Alfred L. Scanlan, Jr.:

Their own pleadings, their application for appeal tell you what it is.

It was an assigning supervisory employees to the production gang, to the production line.

It’s clearly a matter that was subject to the grievance procedure and that’s what the initial walkout was all about — I mean, the initial discharge or walkout by the first employee, Stamoulis.

Now, unlike Atkinson, when we filed the counterclaim in the Iowa court, they did not move to stay the counterclaim and, I think it’s fairly conceded right along that the issues involved at the trial of the counterclaim are inextricably bound up with they’re — I forget the exact phrase used by the appellant, but they’re practically inseparable and they are, they’re basically, whether the walkout was justified.

I assume if the walkout was unjustified, the management wasn’t perhaps justified in treating the no-strike clause as breached but the issues are there back in Iowa in the counterclaim, the same issues that Mr. Watt would send to the arbitrator.

Hugo L. Black:

(Inaudible) — what, in your judgment, would happen if it’s held that this has to go to arbitration with reference to your lawsuit?

Alfred L. Scanlan, Jr.:

That’s it.

Hugo L. Black:

I just read their brief and I can’t understand exactly what they said.

Alfred L. Scanlan, Jr.:

I — I’m not clear on that, Your Honor.

As I understand it, Mr. Watt agrees that we have the right to sue for the breach of the no-strike clause but, since the issues raised there are also raised by their grievance, these are economic matters for — as to which an arbitrator is more qualified and more experienced to decide.

They involve a great deal of detailed pros and cons, and he should decide them first.

And, I don’t know what —

Hugo L. Black:

Does that mean this man should embark on the field that we have in Interstate Commerce Commission other agencies in dividing a lawsuit into two parts, one in which the courts can decide and one which the arbitrators can decide, so that that can be sent back to the court later?

Alfred L. Scanlan, Jr.:

Well I —

Hugo L. Black:

Is that — is that the contention?

Alfred L. Scanlan, Jr.:

Well, I wouldn’t want to characterize his contention, but I can see it being evaluated that way.

Hugo L. Black:

Well what — what other way would it be?

How can you preserve your right to sue unless that’s in?

Alfred L. Scanlan, Jr.:

Well, I agree with you.

They —

Byron R. White:

Mr. Scanlan, (Inaudible) don’t you think that this matter had been dealt with in Atkinson?

It’s the very question we were having discussion with.

Alfred L. Scanlan, Jr.:

No, I — I would like to be able to claim that Atkinson settled this case in our favor, but I don’t think we can read Atkinson that way.

Our adversary circumvent Atkinson and the ruling there by conceding that we can sue for breach but they turn out to be Indian gurus because, after making the concession, they come around and say “but if a grievance is alleged, following the walkout or the discharge which raises the same issues as the walkout — I mean, as the alleged breach, then this must go to the arbitrator.”

In effect, Mr. Justice White, and I know you have justifiable pride of authorship, his argument would render — would render Drake Bakeries meaningless.

I see the luncheon recess has arrived and I’ll sit down.

Well, one, if the arbitrator is privileged to determine these questions, questions which have been traditionally determined by courts, too, the question will be presented then, as we come into our — for our counterclaim, would the matter be res adjudicata in that case.

I would contend, no, they are two different and unrelated causes of action, but the problem exists.

But, there’s another aspect to the point I think Justice Black raised.

If we’re going to take what are admittedly traditional causes of action for breach of contract, for instance, and there are other areas, raising issue that courts have traditionally determined, under conditions of a jury trial, swearing of the witness, full judicial protections, and pass them over on the grounds of some alleged expertise in a situation, where I think it’s fairly arguable the employer didn’t bargain for, where the Union concedes that he attempted to preserve his right to sue.

Arthur J. Goldberg:

(Inaudible) to come and to see if they didn’t have a bargain and you’re now bargaining your rights to present it and that’s going to be entered by the conditional (Inaudible)

You did argue here the right to have him (Inaudible) separately.

You had progression from (Inaudible) and the question is whether they didn’t want to view and, when the dispute is over, the application at that time for arbitration as a bargaining agreement.

Alfred L. Scanlan, Jr.:

Well, I’ll say this, Mr. Justice Goldberg.

If his analysis is signed, then, it seems to me, an employer never can protect himself against avoiding arbitration when there’s been a material breach.

The suggestion in your earlier question that were presented in this case, with the possibility there’s nothing left of the material breach doctrine, then will be a fact and I think that result would be a disservice to arbitration.

Arthur J. Goldberg:

I would assume you likely will not (Inaudible)

Alfred L. Scanlan, Jr.:

Well, no, I don’t think you could.

The way I see it, you — suppose this was an expressed no-strike clause.

“Breach of this no-strike clause shall in no way give rise to issues that are subject to arbitration,” suppose that was written in there very carefully by lawyers.

He could still come in here because, once there’s a walkout or striker — in most cases where there’s a walkout or strike in violation of the “no-walkout or no-strike clause,” it’s followed by discharges.

The employer is mad.

He tells them “comeback or I’ll fire you.”

He fires them.

So, the Union then will be able to use arbitration when it wants to and layoff when it does.

In other words, if you have a weak grievance strike, maybe the employer will capitulate.

If he doesn’t capitulate like he did in here or if the strike fizzles, “alright, now, let’s arbitrate.”

It seems to me, arbitration then, Your Honor, will not only be a one-way street.

It will be a dead-end for an employer.

Earl Warren:

(Inaudible)

Alfred L. Scanlan, Jr.:

Well —

Earl Warren:

Any — any walkout or strike (Inaudible)

Alfred L. Scanlan, Jr.:

Well, it may be possible that language that I can’t visualize that would be acceptable to Unions without bitter bargaining could protect them.

But, short of that, it seems to me, the employer who thinks that he’s free from the duty to arbitrate because he has a pretty firm no-strike clause and it’s excluded even expressly from the arbi — the coverage of the arbitration clause can still find himself subject to arbitration by the mere filing of a grievance and, it seems to me, that if that it so, then the effort that this Court made, and I think very carefully made, to spell out the circumstances in Drake Bakeries under which a matter would be held arbitrable and non-arbitrable and to spell out the circumstances when a court might legitimately hold that a Union had repudiated its contract and an employer was tra — was entitled to treat it as such —

Hugo L. Black:

Mr. Scanlan, I —

Alfred L. Scanlan, Jr.:

Would be meaningless.

Hugo L. Black:

I evidently departed considerably from what I had in mind.

The question I ask is this.

Some years ago, I wrote an opinion for the court in which a matter had been referred to the ICC while a case was pending.

It took about eight years for that thing to be decided because you had to wait for the ICC to decide that part as to the — as to the law that it had to decide, and then the rest had to come back to us.

Hugo L. Black:

I’m — I’m not clear on this.

I understand they say you have your lawsuit still.

If you have your lawsuit still, does that mean that you — the case can wait there until the arbitrator decides these questions given to his jurisdiction then it comes back to the court for it to decide the lawsuit?

What happens —

Alfred L. Scanlan, Jr.:

Well —

Hugo L. Black:

Well, what happens if they win here?

Alfred L. Scanlan, Jr.:

If I understand —

Hugo L. Black:

What happens to your lawsuit?

Alfred L. Scanlan, Jr.:

If I understand my opponent’s argument correctly, we can proceed with our lawsuit when this matter gets back to the Iowa courts, our counterclaim, and that —

Hugo L. Black:

Your counterclaim?

Alfred L. Scanlan, Jr.:

Our counterclaim, our lawsuit is inv — is in the cast in the form of a counterclaim, Mr. Justice Black.

We didn’t start an independent lawsuit.

We answered and then counterclaimed.

I would assume that, if I read his argument correctly, we could get judgment on our counterclaim, although he may then argue that we would be bound by the findings or the award of the arbitrator on this issue —

Hugo L. Black:

If you do that, you’d have —

Alfred L. Scanlan, Jr.:

— which is the identi —

Hugo L. Black:

— to wait.

Alfred L. Scanlan, Jr.:

Pardon?

Hugo L. Black:

If that’s the case, you’d have to wait.

If — if they’re part of the thing that the arbitrator can decide but initially after you’d approve your case, and I don’t know whether that’s the case or not, that’s what I’m asking.

Alfred L. Scanlan, Jr.:

We maintain that it’s not.

Hugo L. Black:

Then you would have to wait.

But, suppose the court holds that there are some other things that are — that the arbitrator must decide and it turns out that they are essential for the court to determine in some way in your case.

Does the court wait for the arbitrator to exercise his judgment in that matter or does he go along and render judgment which is quite different as to what is the law?

Alfred L. Scanlan, Jr.:

I would say, if this were a case where the particular issue was one of the economic questions, say, for instance, the one that gave rise to the dispute initially, whether using production — supervisory employees in the production line, the court should wait for a proceeding to comeback to it.

But, if the issues are the same and the issues on the court-side are the question of whether they breached the contract by a strike that was in violation of the no-strike clause —

Hugo L. Black:

Well, that’s it.

Now, suppose the arbitrator is the only one who can determine under this contract whether that’s a strike, and that’s an element to be a proof in your case.

Does the court have to wait until the arbitrator makes that decision?

Alfred L. Scanlan, Jr.:

I would say, Your Honor, that — well, I may be — that isn’t the question in our case.

Alfred L. Scanlan, Jr.:

That the issue that the court has to decide back in Iowa is not something peculiar to the expertise of an arbitrator, whether or not there was a strike and whether or not it was in violation of a contractual provision, then I would say, in our case, certainly, the court shouldn’t wait.

It should proceed.

Actually, they didn’t ask to stay the counterclaim and I suppose the courts could’ve moved ahead if we hadn’t got down — I would say blocked down, involved in the appeal that is now before Your Honors today.

But, I — very frankly, if it were — if this were a matter involving a peculiar economic issue —

Hugo L. Black:

That’s the suit.

Alfred L. Scanlan, Jr.:

Under the —

Hugo L. Black:

That’s the suit.

Alfred L. Scanlan, Jr.:

— grievance procedure.

Yes, if the suit did —

Hugo L. Black:

The suit began.

Alfred L. Scanlan, Jr.:

If the suit did, I can see the argument is in favor of having the court to wait the decision of the arbitrator —

Hugo L. Black:

Well, of course, it —

Alfred L. Scanlan, Jr.:

But that is not —

Hugo L. Black:

Of course it — of course it should, if the arbitrator has the right to decide some things that are of necessary importance.

Alfred L. Scanlan, Jr.:

That’s correct.

Hugo L. Black:

But that enters into the — my consideration of the problem is to how far arbitration can do that.

Alfred L. Scanlan, Jr.:

Well, I don’t think it should be pushed to the extent that our opponent’s theory would push it here, that the mere allegation of a grievance concerning a walkout, at that moment, cuts off further court consideration of it in a situation where they concede that we have a cause of action that we can pursue in the court.

As I say, they can make this concession and then they take it back by the argument they advance about the grievance.

It seems to me that this makes the Drake Bakery opinion, which we think is a sound opinion and a controlling opinion, would rarely have a set of facts to which anyone could apply it in following a wake out — a walkout because the grievance would be asserted and the argument would be made.

Grievances are things that arbitrators are procurely equipped to determine.

Byron R. White:

(Inaudible)

Alfred L. Scanlan, Jr.:

Well, perhaps I cast it —

Byron R. White:

(Inaudible)

Alfred L. Scanlan, Jr.:

I don’t — I don’t follow you there, Justice —

Byron R. White:

I gather, as I understood, you’ve got the counterclaim (Inaudible)

Alfred L. Scanlan, Jr.:

Well —

Byron R. White:

Regardless that this is the same question as I think Justice Goldberg asked you that (Inaudible)

Alfred L. Scanlan, Jr.:

Well, we’re faced with the one problem, whether the Court — suppose the arbitrator comes up with the finding that these walkouts were justified and these men should be taken back and be p — back-wages paid to the date of the walkout and, on the other hand, the Supreme Court of Iowa pulls a trial court or a jury finding perhaps that the employer suffered a 150,000 damages because of the shrinkage of the cattle in the yards during the period of the strike.

Byron R. White:

What if —

Alfred L. Scanlan, Jr.:

Same set of facts, two directly opposing the decisions.

Byron R. White:

What (Inaudible) the arbitrator manage to award?

It makes no reference on what he should do.

Alfred L. Scanlan, Jr.:

Well, that’s another difficulty with arbitration, and I think it —

Byron R. White:

Well, I don’t know if that could be interpreted as (Inaudible)

Alfred L. Scanlan, Jr.:

Well, I can’t — we can’t be sure what trouble an arbitrator’s award in this proceeding would have or would — what impact it would have on our lawsuit, but we’re certain —

William O. Douglas:

Mr. Scanlan, look at the other side.

Suppose the Iowa court, on the trial of the counterclaim, decides that there was — the Union did not authorize a strike or a walkout.

It had no part in it.

Just assume that.

Then, would the Union — then, could the Union go to arbitration?

Alfred L. Scanlan, Jr.:

Yes, I think — I think they could.

I think, Your Honor, this would happen.

If, on the trial of the counterclaim, the trial court found that the Union didn’t advocate the strike and the men did not walkout, I mean, that’s the problem here.

Even if the Union didn’t advocate support or sanction the strike, we still have the case because the employees walked out.

The record is clear on that, and the clause — the no-strike clause applies to walkouts by the employees, as well as strikes called by the Union.

But, just to rephrase your question, if I may, if the trial court found that the men were justified in walking out on the trial of a counterclaim, our argument then would be that, certainly, the Union would be free to reopen it under appropriate Iowa procedure and, if that was denied, they could appeal to the Supreme Court of Iowa because, then, the order would be final.

The whole controversy would be finished and, if the Supreme Court of Iowa denied that, they would be back here.

That I think the argument there is related to the prematurity that we feel exists here.

We don’t dispute that the question whether a judgment is final is a practical judgment but —

Arthur J. Goldberg:

Mr. Scanlan, isn’t this — doesn’t this place the argument of getting a lot of strong men, aren’t there two separate disparate issues involved here, a lawsuit here?

For example, no-strike clause, look at page 8.

There may be some various relationships on that.

The issues are tribal in different forms and on different languages.

They take the no-strike clause.

In the no-strike clause, the Union shall not call or sanction any slowdown, work stoppage, or strike.

Now, the issue on your counterclaim would then be that if the Union called or sanctioned.

Alfred L. Scanlan, Jr.:

And — and the employees engaged in.

Arthur J. Goldberg:

Now, in the arbitration, even if the Union didn’t call or sanction the strike, even if the Union did not call the strike, you would still reach your case suppose the arbitrator assumes the employee walked out, if the employee walked out.

Alfred L. Scanlan, Jr.:

I would hope so.

Arthur J. Goldberg:

Yes, the court explains that, under this provision, an employee who walks out, whether the Union sanctioned it or not, the employee walks out under — without the — under this provision, he commits a violation of the contract and could not make —

Alfred L. Scanlan, Jr.:

Oh, I — I agree.

I think we’d have an excellent case.

I think we’d win arbitration but I think that the law is that there’s a bit of material breach, that there’s certainly a circumstance.

Arthur J. Goldberg:

That’s the (Inaudible) now.

Alfred L. Scanlan, Jr.:

That’s right.

Arthur J. Goldberg:

But what I’m suggesting is that your lawsuit stands on a different box from their grievances and your winning the lawsuit —

(Inaudible)

Arthur J. Goldberg:

May or may not have (Inaudible)

Alfred L. Scanlan, Jr.:

It’s possible.

Arthur J. Goldberg:

Yes.

Alfred L. Scanlan, Jr.:

But the fundamental issue in both of them, of course, is whether the walkouts were justified under the circumstances that existed at time but —

Arthur J. Goldberg:

So, you have maintained the theory of why judgment against the Union if one employee walked out without the Union’s permission.

Alfred L. Scanlan, Jr.:

Oh, no.

No, I’m treating this in the terms of the 191-walkout.

I — I think the question of whether the Union did or did not sanction the strike is arguable under the state of the pleadings.

I think the trial court of Iowa and the Supreme Court of Iowa, more familiar perhaps with the controversy, were entitled to go so far as to say the Union, if it didn’t call it, it sanctioned it.

But, the —

Arthur J. Goldberg:

There is a problem (Inaudible)

Every labor contract, we know by practical experience and results of arbitration, that no finding (Inaudible)

Alfred L. Scanlan, Jr.:

May I — may I answer that, if I can, Mr. Justice Goldberg?

I agree that the mutually dependent Covenant Doctrine is not applicable as such to labor Union contracts.

I agree that — I won’t say they’re sui generis but they’re certainly different than many of the commercial contracts with which courts are familiar.

But, they are not that different and the clauses that are important to the various parties are many, and I don’t argue that, in every negotiation, the no-strike clause is given in exchange for the arbitration clause.

But, certainly, the negotiating parties regard them as having some correlation.

I noticed our opponents, well, let’s put it this way.

I think at least the two clauses have this in common.

Both aim at labor peace, both aim at continued production and employment, and both of them the no-strike clause on the one hand and the arbitration clause on the other, represent a very valuable concession by the respective party.

For the employer, on the arbitration clause, he has given up the right, in effect, to manage his business in a certain area.

For the Union, by giving the no-strike no-walkout clause, they surrendered a very valuable economic right.

So, while they may not be quid pro quo, and I don’t argue that they are and I agree that there’s a difference, nevertheless, they are important to the parties and they have some relation.

Alfred L. Scanlan, Jr.:

Now, our adversary say, in the reply brief, they rather minimize the importance of the no-strike clause to the — to the employer.

At Page 13 of their reply brief, they said, “No one pretends that a no-strike clause guarantees an employer against strikes.”

Well, I don’t know where and on what basis they make that point, and — but I suggest that the importance of the no-strike clause of the employers of this nation may be found in the statistics given us by a very — a writer in a very recent note in the New York University Law Journal, 38 NYU at Page 1009, were he says, “Absolute no-strike clauses are found in 48%, conditional no-strike clauses in 46% of all collective bargaining contracts.”

But, I will agree that maybe the importance of the no-strike clause, which is the employer’s guarantee of industrial peace during the period of agreement.

I will agree maybe its importance varies from industry from industry.

Perhaps, in the Steel Industry, for instance, it isn’t — it’s important but not so bad as a strike, but as merely cessation of production and you stop sales at a profit.

But, in an industry like the Meat Packing Industry where you have perishable cattle out in the yards, 3,000 or 4,000 of them, shrinking in the sun at the rate of 4% a day, the guarantee of continued prosuc — production and the immunization of the employer from even quickie strikes, and this was no quickie strike, the record is perfectly clear.

It begun on May the 11th and they filed their grievances on July the — on July the 15th.

This was no quickie strike.

You can see the importance of the no-strike clause to an employer and if it’s going to turn out —

Byron R. White:

Mr. Scanlan, if he was (Inaudible) why is no one’s arbitration taken?

Alfred L. Scanlan, Jr.:

They’re — well, let me put it this way.

Can I put it from the general and then specifically our case?

I mean, we’re talking now about the importance of the no-strike clause and the arbitration.

Byron R. White:

Now, if the (Inaudible)

Alfred L. Scanlan, Jr.:

We want to arbitrate that.

Byron R. White:

What?

Alfred L. Scanlan, Jr.:

We want to arbitrate that.

They — they refused the offer.

Byron R. White:

You turned arbitration down?

Alfred L. Scanlan, Jr.:

No.

We — we offered to arbitrate it at the time.

There’s also a question in this case, not raised here, of the —

Byron R. White:

Well, you mean —

Alfred L. Scanlan, Jr.:

— timeliness.

Byron R. White:

(Inaudible)

Alfred L. Scanlan, Jr.:

No, no.

Stamoulis either was walked — was fired.

Byron R. White:

Because the Union did have (Inaudible)

Alfred L. Scanlan, Jr.:

Well, maybe I don’t follow you.

Alfred L. Scanlan, Jr.:

Stamoulis walked — the first employee walked off.

Byron R. White:

Yes.

Alfred L. Scanlan, Jr.:

The — the company offered to arbitrate his discharge.

I’m sorry, his discharge.

They offered to arbitrate his discharge.

The —

Byron R. White:

And the proceedings pretty much covers that.

Alfred L. Scanlan, Jr.:

That’s right.

Byron R. White:

The other proceedings —

Alfred L. Scanlan, Jr.:

But the others — that’s right.

But then the — the 191 walked off.

The employer then said, “comeback and we’ll arbitrate Stamoulis’ case as a grievance but, if you don’t comeback, you’re finished,” and they didn’t comeback.

Byron R. White:

(Inaudible) for the arbitrators agreed that he should stop.

Alfred L. Scanlan, Jr.:

That’s right.

At that point, the employer took the position that, under the circumstances of the case, the contract was terminated and they warned them that they’ve hired replacements and they began to do that and they broke the strike.

Byron R. White:

Suppose the employer (Inaudible)

Alfred L. Scanlan, Jr.:

Well, I’m saying, from the general proposition, if it turns out that no-strike clauses can — an arbitration clause can be used by the Union in two ways one, when they have a legitimate grievance and they seek arbitration, fine.

On the other hand, they have a weak grievance, they’re still permitted to resort to the test of their economic strength.

They strike.

When the strike fizzles or the employer proves stronger than they thought, then they claim — then they assert the grievance.

They want to arbitrate the discharge, which is exactly what they did here on July the 5th, after the strike was finished in effect.

In other words, it wasn’t achieving its objective.

They wanted to arbitrate.

Now, that’s — if arbitration is going to mean that to employers, I suggest that employers will be reluctant to enter into that type of agreement.

Now, if that’s true, I don’t think we —

Byron R. White:

It’s not arbitrating.

Arbitrating is a (Inaudible)

Alfred L. Scanlan, Jr.:

No, arbitrating is an act — fine remedy but if it’s going to be used — if one party is to have a preferred advantage in invoking its terms when it sees fit and ignoring them when it sees fit, the other party, very understandably, is going to be reluctant to enter into those agreements and, although Justice Goldberg indicated you could draft a clause that will protect you and maybe you could, it seems to me, it will intensify the difficulty and the bitterness sometimes of collective bargaining negotiations.

It doesn’t —

Byron R. White:

But this is not what an arbitrator really (Inaudible)

Alfred L. Scanlan, Jr.:

No.

I — I don’t agree with your paraphrasing of it.

I — I would say that, under the circumstances of this case, the — that the — after having offered to arbitrate and being refused by the Union and have it — having this developed into a strike or walkout, if you would, the paralyzed production caused the employer a great damage.

He was entitled to take the position that material breach had occurred and I think, under Drake Bakery, there is room left for a material breach that can be determined by a court and does not have to be referred to an arbitrator who has no special expertise in that field.

And, we think that this is such a case.

I would like to, just at the end here —

Byron R. White:

Yes, but just about a matter of (Inaudible)

Alfred L. Scanlan, Jr.:

The — and the circumstances of the repudiation, as Your Honor referred to in his opinion in Drake Bakeries and, here, we think the circumstances of the repudiation, the length and duration of the strike justified the employer in doing what he did and made it a matter that a court could determine and a matter that did not have to wait a decision by an arbitrator.

Potter Stewart:

Could you —

Alfred L. Scanlan, Jr.:

I —

Potter Stewart:

Excuse me.

Could you have enjoined the strike in the Iowa courts?

Alfred L. Scanlan, Jr.:

We did.

Potter Stewart:

You did?

Alfred L. Scanlan, Jr.:

It’s in the record in a footnote but I agree.

It’s beyond the record as such.

Yes, we did enjoin it, the violence — we didn’t enjoin the strike.

We enjoined mass picketing in violence of a strike that they didn’t sanction at all.

Potter Stewart:

Could you have gotten an injunction against the strike itself, relying on the collective bargaining agreement?

Alfred L. Scanlan, Jr.:

I believe not.

I — I really don’t know the answer to that.

I would doubt that we could’ve enjoined the strike itself.

I —

Potter Stewart:

Alright.

Alfred L. Scanlan, Jr.:

Under Iowa law —

Potter Stewart:

Yes.

Does Iowa have a so-called little Norris-Laguardia Act or —

Alfred L. Scanlan, Jr.:

Well, I must confess on that, Your Honor.

I’m not quite sure but I — sort of against my instincts to say that you could enjoin a strike.

I — we enjoined the excesses of the strike but, I confess, my local colleague here says that federal law would preempt in this situation and we could not have enjoined the strike.

Potter Stewart:

What federal law, the Norris-Laguardia Act?

Alfred L. Scanlan, Jr.:

Well, it was an Interstate Commerce situation here.

Well, I must say, I don’t know the answer —

Potter Stewart:

The Norris-Laguardia Act, by its terms, applies only to federal courts.

Alfred L. Scanlan, Jr.:

I don’t know whether we could have enjoined this strike.

I would doubt it because I would’ve think the careful preparation that went into the advice management got below, would’ve led them to find out that they could’ve tried to enjoin the strike, but they didn’t.

They didn’t get an injunction against mass picketing —

Potter Stewart:

And so, the excesses?

Alfred L. Scanlan, Jr.:

That’s right.

Richard F. Watt:

I think I have just a minute left, Mr. Chief Justice.

I — I wanted to address myself —

Earl Warren:

(Inaudible)

Richard F. Watt:

I think that’s the question which has not yet been determined.

Earl Warren:

(Inaudible)

Richard F. Watt:

It certainly been suggested, there’s a real problem there.

On the existing state of the law, I think it’s a tossup as to whether a state court could issue an injunction.

Hugo L. Black:

In enforcing (Inaudible)

Richard F. Watt:

Right, or whether it couldn’t.

I — I don’t think that question is directly been posed by recognized as a real problem, but it was not attempted here.

I want to address myself, if I might, briefly to the question that Mr. Justice Black raised as to the fact that there would be apparently two separate procedures followed and they might proceed simultaneously or one might go ahead first and wait on the other.

I see no reason why the arbitration could not proceed simultaneously with the counterclaim which the respondent has for damages pending in the Iowa courts.

And, I see nothing inherent in the situation to make it impossible to have a judgment awarded to respondent for damages for breach of contract and, at the same time, have an arbitrator conclude that discharge was perhaps too extreme a penalty to impose on certain of the employees.

Hugo L. Black:

Suppose — Mr. Chief Justice —

Earl Warren:

Just go ahead.

Hugo L. Black:

I’m asking just because I just don’t understand quite from the facts here.

Assume that you are asking to have arbitrated something with reference to the interpretation of the contract as applied to the conduct involved where you ask the ar — for arbitration of that and the final decision on it, and you get it in your favor, and suppose that same issue has to be solved by the court.

It’s trying the suit for damages.

Which governs?

Richard F. Watt:

I think, although the factual circumstances upon which the arbitrator and the court would base a decision are substantially the same, the precise issue which each must decide is different.

The arbitrator must decide whether, under the circumstances, there was just cause for discharge.

Richard F. Watt:

The court must decide whether the Union violated the contract by participating in, sanctioning, or calling the strike.

Hugo L. Black:

That’s right.

But, suppose in — suppose the Union’s claim of the grievance claim was under contract where he could not recover if the strike was unjustified, and that was decided there, and the court had a case damage suit pending where the continuous claiming damage is on the ground that the strike was unjustified.

Would the arbitrator’s decision be final or could the court make a different decision?

Richard F. Watt:

I think the court could make a different decision.

I think —

Hugo L. Black:

That would be a little contrary to the rule we’ve had with reference to primary jurisdiction of the various agencies, and I don’t say that it should apply but it’s the problem that worry me in connection with the arbitrator deciding some of the same things that would be involved in the right to sue which Congress has given for bridge of the contract, whether rightful or wrongful.

Richard F. Watt:

But I think the arbitrator decides it in a context in which it is not bound to nearly the same extent by traditional notions as to evidence and as to just what could be introduced in the court of law.

I think there are many things the arbitrator might take into account —

Hugo L. Black:

But it’s just a pretty bad —

Richard F. Watt:

Such as the context of the —

Hugo L. Black:

Wouldn’t it be a pretty bad situation, and I think that’s a great responsibility for the rule that’s involved of that agency, to have one agency which the government has selected decide the thing one way and award damages to one group on the basis that it means this and the court come in and award damages to the other side for exactly the same thing, wouldn’t that be a pretty bad governmental policy?

Richard F. Watt:

I think it might, in a given situation, lead to a certain amount of confusion but I don’t think the way the law and the procedures now exist that there’s any reason why both the arbitration and the court proceeding should not proceed as it were on parallel rails.

Hugo L. Black:

What you are asking then, as I understand it, you’re not asking the court to say that the employer loses his full right to sue under 301.

He can prove his facts satisfactory to the judge even though an arbitrator may have awarded damages to the other side by a precisely arbitrated interpretation of facts.

Richard F. Watt:

In this situation, that could not arise, Mr. Justice Black, because, here, all we are seeking is —

Hugo L. Black:

Well, it’s —

Richard F. Watt:

Reinstatement.

Now, I suppose that came with the damages.

Hugo L. Black:

It’s lacking in this case.

It’s lacking in this case and I’m not sure whether it’s in it or not.

I’ve just read the pleading.

It seems to me like your right of recovery under your grievance depends, to a large extent, on proof of facts which would deprive the other people of a right to recover under that 301 proceeding.

Maybe I’m wrong on that.

Richard F. Watt:

I don’t think we’ll deprive them of the right.