JOHN WILEY & SONS v. LIVINGSTON

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Argument of Charles H. Lieb

Chief Justice Earl Warren: Number 91, John Wiley & Sons, Incorporated, Petitioner, versus David Livingston.

Mr. Lieb.

Mr. Charles H. Lieb: Mr. Chief Justice --

Chief Justice Earl Warren: Is it Lieb or Libe?

Mr. Charles H. Lieb: Lieb, sir.

Chief Justice Earl Warren: Mr. Lieb, yes.

Mr. Charles H. Lieb: Thank you.

If the Court please, this is a Section 301 action to compel Wiley to submit to arbitration under the Union's contract with Interscience Publishers.

Interscience and Wiley were technical and scientific publishers.

Interscience, for bona fide reasons, had some -- had merged into Wiley four months before the expiration of Interscience's contract with the Union.

As a result of the merger, the business of Interscience was combined with Wiley, and the Interscience stockholders, under the merger and consolidation agreement, received a 20% stock interest in the Wiley Company.

Interscience was a small company, and its clerical workers were unionized.

Wiley was a large much over company, had never been and was not and is not unionized.

The Interscience contract, which is sued under, contained no successor cause, and the contract, specifically, was not assumed by Wiley at the time in the merger.

The merger took place on October 2nd, 1961.

The Interscience contract by its terms expired on January 31, 1962.

The process of combining the two businesses was commenced immediately, and all of this is contested, apparently, by the Union in its brief to this Court and by amicus.

It was completed before the contract expired.

And the record so indicates if you look hard enough for it.

Neither at the time of the merger nor thereafter, was any Interscience employee discharged, disciplined nor did any Interscience employee ever asserted nor has an Interscience employee ever asserted a grievance against Wiley.

To this day, some two years after the event, since this suit was commenced, we have no notion.

We have no idea whether, in fact, the Union in prosecuting this suit, does, in fact, represent any of the former Interscience employees who are now members of the Wiley Enterprise.

This action was commenced on January 23rd, 1962, a week before the contract expired, about four months after the merger.

The action was commenced under our Section 90 of the New York Stock Corporation Law.

The allegation being that under the provisions of Section 90, Wiley, as a constituent company to a merger, was responsible for the obligations of the merged company.

The complaint, and I'll read from page 5, alleges, I'm reading from the first full paragraph on page 5, alleges that notwithstanding the merger on the provisions of Section 90 of the Stock Corporation Law, the Company, since the consolidation, has failed and refused to recognize the validity of the collective bargaining agreement, currently, that is January 23rd, a week before the contract expired, a moot question because no controversies have arisen during the term of the contract.

And beyond January 30, that's an error in printing, and beyond January 31, 1962, which is the date of the expiration of the Interscience contract, and it's further alleged that Wiley has failed and refused to recognize the property rights of the former Interscience employees thereunder, that is under the contract expiring January 31, a week hence, and otherwise, beyond January 31, 1962.

And the relief that is demanded, and I read from page 10 in the record, is that the Union asks that Wiley, with whom it has no contract, submit to arbitration with the Union to arbitrate the following five questions, whether the seniority rights build up by the Interscience employees must be accorded to the employees now, that's January 23rd, a week before the contract expired and after January 31, 1962, that's after the contract expired.

I should add that in the briefs to this Court, the position has taken that not only do seniority rights build up as of January 31, 1962, not only are they claimed to carryover into the separate Wiley Enterprise, but it's claimed that the employees continue to have the rights to build up additional seniority rights after the expiration of the contract.

The second demand is whether, as part of the wage structure of the employees, the Company, that is Wiley, is under an obligation to continue to make contributions to the District 65 Security and Welfare Plan now, January 23rd, and after January 31, the expiration of the contract.

Justice William J. Brennan: (Inaudible) January 31.

It says, January (Voice Overlap) --

Mr. Charles H. Lieb: It should be January 31.

That's -- that's our respondents' error in printing, no issue on that.

I should say that although the demand is that the Company continued to make contributions, Wiley never made contributions.

And because the contributions were closed at the time of the merger, no further contributions made following October 2nd, 1961.

Third, whether the job security and the grievance provisions of the contract between the parties shall continue in full force in effect and the briefs make very clear that they're talking not only of up to January 31, which of course is moot, but thereafter, indefinitely and forever presumably.

And finally, DNE whether the Company must obligate itself to continue liable now and after January 31, 1962, to severance pay and to vacation pay.

And I think it's clear from the briefs that the claim is made that they are talking of an accrual of additional severance pay and certainly additional vacation pay because all vacation pay that had been earned under the contract has always been paid.

With the exception of the claim for the welfare plan contributions for the four-month period between the date of the merger, October 2nd, 1961 and January 31, all of the now issues, now and hereafter, are moot.

No controversies have ever risen.

What the Union really wants to arbitrate is whether the Interscience employees carryover to the Wiley Enterprise and retain permanently Wiley work in the Wiley Enterprise the working conditions which the Interscience Company granted, under the terms of the expired Interscience contract and which contract, of course, governed the Interscience Enterprise.

The case got into court and gets here not after trial but on a sort of mixed proceeding on the Union moving off under the Arbitration Act and under Section 301.

We've assumed because the Court of Appeals has said that this is a Section 301 action and therefore, I think the Arbitration Act questions are --are not in the case.

But the point is that no answer was filed.

The time to extend an answer has been extended -- time to file an answer has been extended until after a final order in this action.

There was no trial, case was heard on the complaint in order to show cause in the petition and opposing affidavits.

Justice William O. Douglas: Does anything occur in the arbitration, in their proposed arbitration?

Was there an arbiter?

Mr. Charles H. Lieb: No, sir.

Justice William O. Douglas: He didn't rule on this question?

Mr. Charles H. Lieb: There was never a demand made for arbitration.

There was never an issue claiming for arbitration.

This complaint was filed on January 23rd without a prior filing -- without the prior service or making of a demand for arbitration.

Justice William O. Douglas: I suppose that there had been arbitration that the issue that you now litigate could have been making to the Court as result of the outcome -- depending on the outcome of the arbitration, is it not?

Mr. Charles H. Lieb: Well, I think it's -- I think it's fair to say that even had a -- a demand for arbitration have been made, we undoubtedly would've urged that the claims asserted were not within the scope of --

Justice William O. Douglas: But --

Mr. Charles H. Lieb: -- the contract and not within the scope of the arbitration clause.

Justice William O. Douglas: And was that -- is that -- whatever the arbiter would decide would be reviewable, I suppose, by courts or --

Mr. Charles H. Lieb: We would have urged that this is the decision that most preliminary have been made by the Court because we would have urged that this involves a question of the construction of the contract but none of that happens.

Justice William J. Brennan: (Inaudible)

Mr. Charles H. Lieb: What page are you reading from, sir?

Justice William J. Brennan: (Inaudible)

Mr. Charles H. Lieb: The record --

Justice William J. Brennan: (Inaudible)

Mr. Charles H. Lieb: Oh, yes.

Justice William J. Brennan: Does that refer to these five or six issues at the bottom of page 10 when the Court of Appeals says that they construe the agreement as requiring of those questions by the arbiters?

Mr. Charles H. Lieb: Yes, yes, sir.

Justice William J. Brennan: So at least -- what I'm -- what we -- I ask you a question is, how -- how did the Court of Appeals reach the question whether these are arbitrable questions, if that you say that was not an issue made in the -- in the case?

Mr. Charles H. Lieb: Let me -- I'm not sure that I explained myself clearly, sir.

The complaint was filed on January 23rd with no prior demand for arbitration having been made.

The first demand was contained in the complaint.

Justice William J. Brennan: Yes, complaint asked an order to -- of arbitration, didn't it?

Mr. Charles H. Lieb: Correct, yes, sir.

The District Court dismissed the motion.

It dismissed the application on two grounds.

It assumed for the purpose of its decision that the Wiley -- that the Interscience obligation to arbitrate carried over under Section 90, didn't decide that question.

But it said, “We deny arbitration, first, because in our opinion, the claims that are sought to be arbitrated are not arbitrable within the scope of the contract.

And secondly, it said, “We find that none of the,” -- “I find”, the judge said, “None of the conditions precedent to arbitration have been complied with.

They have been totally ignored.

There has been an abandonment of the procedure.”

And for that reason, the implication was dismissed.

The case went up to the Court of Appeals.

The Court of Appeals reversed.

The Court of Appeals directed arbitration, and it directed arbitration in this manner.

It said, "We note your questions, and we'll pass them all off to the arbitrator.

Let the arbitrator determine whether or not Wiley is required to arbitrate the substantive terms of the contract.

Let the arbitrator determine whether or not there are conditions precedent to arbitration and if so, whether those conditions have been complied with, and if not, whether they have been waived, and let the arbitrator determine whether they are all in fact vested rights,” so-called living rights that the Union claims here, “And let the arbitrator determine the merits of that.”

Consequently, we are here now where in and of --

Justice William J. Brennan: (Voice Overlap) --

Mr. Charles H. Lieb: I beg --

Justice William J. Brennan: Well --

Mr. Charles H. Lieb: -- your pardon.

Justice William J. Brennan: -- I'm still puzzled.

If that's all they did, what did the Court of Appeals mean when it construes the agreement and saying that these issues tendered by the Union are indeed arbitrable under the agreement?

Mr. Charles H. Lieb: I think the -- the agreement -- the -- the Court of Appeals' opinion, at least the majority opinion by Judge Medina, is, in my opinion and with due respect, a very turgid and -- and difficult opinion to read.

On page 90 in the record, he says, Judge Medina says for the majority that the terms of the agreement contemplated the arbitration of just such a dispute or controversy as the one before us.

I must assume, Your Honors, that what he was saying was, and I interpolate the form, I don't find it on this page, I think that he's saying is -- what he is saying is, had there not been a merger and had this claim been made against Interscience, where Interscience still an active company doing business, we would find that these claims fall within the scope.

I must come to that conclusion because I turn over to pages 94 and 95 of the majority opinion, where the Court disposes of this aspect of the case.

And the Court says, in the paragraph in -- starting at the middle of the page, down toward the end of the fourth line, “We think and hold in the exercise of our duty to fashion a rule that it is not too much to expect and require this employer proceed to arbitration, with the Union, to determine whether the obligation to arbitrate, regarding the substantive terms of the contract, survived the consolidation.

And if so, just what rights survived?”

and so on.

If you'll turn over to Judge Kaufman's concurring opinion on pages 110 and 111, he states it much more subsequently.

He says, and I'm reading from 110, “We hold that the collective bargaining agreement is not clearly removed from the scope of the arbitration the following questions, one, whether the collective bargaining agreement as a whole, survived the consolidation of Interscience and Wiley.

Two, if the agreement did survive, thereby imposing upon Wiley an obligation to arbitrate etcetera, then whether the Union had to comport with the conditions precedent.

And three, whether, in fact, there are rights to carryover.”

And to make more certain, what is certain in the next paragraph of his short opinion, he says, and I'm reading from that first full paragraph at probably on 131, "Our decision today, although there's no successor cause, permits the arbitrator to imply their successor cause, if under the circumstances, he thinks the implication is proper."

And he continues, "It is this power to read the successor cause into the collective agreement which makes Wiley a proper party defendant.”

And he goes on and says in which makes the Union a proper party plaintiff.

And he says that if the arbitrator finds that the contract did not, in fact, carryover, then of course, Wiley shouldn't have been sued and the Union shouldn't have sued.

Justice Byron R. White: Do you -- I'm not sure and do you think that Judge Kaufman had the right -- did Judge Kaufman had the correct deal of the major -- of the (Voice Overlap) --

Mr. Charles H. Lieb: I have no doubt of it, sir.

I think that -- I think my own feeling is that the earlier pages in Judge Medina's opinion were unclear because I think that he was talking of an obligation that he was finding in the Interscience contract.

But then at pages 94 and 95 which I read from, I think he then tries to take the Interscience contract and decide whether or not Wiley, a stranger, not a party to the contract, can be made a respondent in and of --

Justice Byron R. White: What do you think -- what do you think the rule has been, as laid down in this Court, that when -- that when the contract does not clearly put outside the scope of arbitration and that is in dispute, you order arbitration or not?

Mr. Charles H. Lieb: We think, and this goes to the heart of our argument, we think that where what is not clear is whether a respondent is -- is committed to a contract obligation, we think that where the question is, has the respondent, the party sought to be charged, made an agreement to arbitrate?

We think that under the rules that this Court has --

Justice Byron R. White: But when --

Mr. Charles H. Lieb: -- laid down and elaborated --

Justice Byron R. White: -- when you read -- when you read an arbitration clause and you have some real doubt about which way would its arbitrable or not and that's about an even question, what do you do about it?

Mr. Charles H. Lieb: Well, we say in our reply brief, Mr. Justice White, that we think that you laid down two rules in the Steelworkers cases, we think that you laid down a clear demonstration rule to decide whether or not a court is to be relieved of its duty to determine whether the party sought to be charged, has, in fact, made an agreement, and then you establish the second rule for the one who is to make the decision, whether it's the court of the arbitrator, as to whether the claim that is made is within the scope of the arbitration clause.

Justice Byron R. White: Yes, but when without much doubt about an arbitration clause is to be this way or another, the Court has to resolve with this, does it order of arbitration?

Mr. Charles H. Lieb: We aren't talking, sir, of an arbitration clause, we're talking here of an obligation to arbitrate.

I haven't gotten to the arbitration clause.

How do you get Wiley before this Court?

Wiley is a 107-year old company.

Wiley -- Wiley does a $15,000,000 volume of business.

Wiley has 400 employees.

Interscience was a company having 40 unionized people and according to the record doing $1,000,000 worth of business.

That was an error, it should've been $3,000,000.

But -- but Interscience has been absorbed by Wiley.

Interscience isn't findable in Wiley.

Interscience business, the industrial enterprise, what my friend, Mr. Feller terms in what we call the continuing employing enterprise and the -- and the separate collective bargaining unit disappeared as a result of the absorption of the Interscience business into Wiley.

And we say this is really no different than if Wiley had, in fact, purchased the Interscience business as it could have with the -- exactly the same results incidentally, under the Internal Revenue Code because in either of that, it would have been a deferred recognition of (Inaudible) case.

Had they purchased it and given for the assets, given to the stockholders 20% of the Wiley stock even under amicus' brief, they concede.And in that case, they would have no claim against Wiley.

Now, you've found me into the heart of my case, and I -- I welcome it because my first point is that the Court -- that the Court obviously, erroneously gave away it's jurisdiction to determine whether Wiley made a contract.

And obviously and clearly, it should not have referred back to the arbitrator to determine.

How do the Union in amicus treat that?

Well, the Union where the kind of shutting its eyes hard in fervent belief says that the Court did decide.

Well, of course, that's flying into the face of the language, it didn't.

Amicus looks the other way.

Amicus doesn't like the question so it, in substance, says to this Court, “You decide.”

And we join with amicus.

And we asked you to decide it because we think the record is sufficient for you to decide it, which then brings me to the four questions, which I think, this case presents, four open questions we -- we present them at page 3 of our reply brief.

The first question is whether the Interscience obligation to arbitrate is binding on Wiley, whereas a proximate result of the merger of Interscience into Wiley, the business and workforce of Interscience, was absorbed by Wiley's business, and the Interscience Industrial Community was dissolved.

My view of the question is not the broad question that amicus says, does the contract as a whole carryover it.

It's a much narrower one, where the business has been absorbed, where the Interscience Industrial Enterprise has been terminated as a proximate result of the merger, does the contract obligation to arbitrate carry on?

Justice Byron R. White: When does (Inaudible) that the dissolution of the bargaining unit took place, at the time of the merger or when it actually did?

Mr. Charles H. Lieb: We --

Justice Byron R. White: Let's assume for the moment that you said that the -- that the holding was the collective bargaining contract in this case survived the merger.

I mean if that all or was to it -- let's assume that the holding was that the -- that it survived the merger.

Mr. Charles H. Lieb: Mr. Justice --

Justice Byron R. White: When -- when -- then was there a (Inaudible) between them and the -- and the dissolution of the bargaining unit?

Mr. Charles H. Lieb: Mr. Justice White, I -- I'd like to answer that question obliquely if I may.

That was not a question that was ever before this Court.

We asserted in our answering papers that the Interscience Enterprise was dissolved at the time of the merger.

We --

Justice Byron R. White: Well, it was but we're talking about the bargaining unit.

Mr. Charles H. Lieb: Yes, but we stated as a fact to the Court in our papers and our position and it was never denied that the Interscience workforce was merged into and was integrated into the Wiley workforce on October 2nd, the date of the merger.

Justice Byron R. White: Well is that (Inaudible) -- is that -- that (Voice Overlap) on the date of the merger I think, did you -- did you keep the -- the (Inaudible) clause in this contract and Wiley had taken over Interscience's plant to keep the plant separate and the bargaining unit intact, this probably would've been dealing with this Union (Voice Overlap) --

Mr. Charles H. Lieb: I'll answer that question.

If and I -- we say it in our briefs, we don't -- we don't try to deduct that.

If Wiley had acquired Interscience and had kept Interscience as a separate division, separate division, I have no doubt.

And we volunteer the rule, although there's much authority in the lower courts and the Board against it, we volunteer the rule and suggest the rule then in that case, what amicus, and we call the rule of the continuing employing enterprise or industrial community, would have required Wiley to recognize the Union.

But we say that that is not the case here for a number of reasons.

First, because we put an issue that fact.

We took the position before the trial court.

Before this complaint was served, before this action was dreamt of, we wrote to the Union before the merger and at the date of the merger that the workforces had been integrated.

I refer you to -- to the letters appearing on pages 78 to 80.

Justice Byron R. White: I understand that.

Of course, I wonder either the Union or amicus says that the integration of the unit took place at a date after the merger.

I'm not -- let's just assume for the moment that it did take place after the merger but did it -- would it had taken place as much after the merger -- as after the terminate -- expiration date have come to that.

Mr. Charles H. Lieb: I think that's -- that's an iffy question and I would like to answer differently.

I say to you, sir, what is the fact, that the integration was commenced according to plan, pre-planning and plan was commenced on October 2nd at 9 o'clock the date of the merger and was carried through over a period of four months until the first week in January when the Interscience offices were actually closed and the employees who were still remaining in Interscience, some of them are already having been moved over to Wiley, those remaining were finally moved over to Wiley.

But, were we given the chance to offer proof, and none of this is in the record because this was never an issue, were we given the chance to offer proof on this in addition to the correspondents that we have in this record, the allegations of the complaint would say in substance that there is a new enterprise.

And the complaint was filed before the contract was finished.

But in addition to that, we would show the plan of integration, which actually was put into effect and was accomplished as per plan, commencing with the date of the merger.

Amicus argues that unless all of this happens on the precise date of the merger, then the contract goes over.

Justice Byron R. White: I didn't (Inaudible) about that, I'm just interested in the fact.

Mr. Charles H. Lieb: The fact -- the fact is as I've told you, the integration was commenced on the date of the merger and was concluded as per plan in the first week of January.

Justice Byron R. White: That's before the contract was scheduled to expire.

Mr. Charles H. Lieb: The contract expired -- correct, the contract expired on January 31.

The move, the physical move was made, this does not appear on the record but we can find it for you in footnote, the date, the move was made in the first week of January, three weeks before the contract terminated.

Now, we say that there are four questions that this case presents.

The first one is the one that we've been talking about which is whether where, as a proximate result of the merger, not on the date of the merger but as a proximate result of the merger, the Interscience Enterprise is discontinued, can there be an obligation on the part of the successor Wiley to arbitrate under the Interscience contract?

The second question we add, is whether in any event, even assuming that there might be some carryover of employees' rights, can the Union, who at the time it filed it suit, was no longer the employees' collective bargaining representative because these 40 people had been merged into a workforce of 400 or doing similar work, can the Union arbitrate claims in their behalf when those claims relate as they do here, not to liquidated claims but to working conditions in the Wiley Enterprise?

Different question, there maybe carryover rights, possibly, none is yet been decided, in hearing an employees following the termination of a contract and before a new contract is negotiated, but if the Union in the meantime is no longer the collective bargaining representative of the employees, can it commence an action in their behalf?

And we think, as we argue at length in our brief and reply brief under the cases Montgomery Ward, Keenan, Modal, Glendale, we think that it obviously cannot.

The third question is, and here, we come to your Steelworkers cases, whether these claims to permanent working conditions in the Interscience Enterprise spelled out by faith from an Interscience contract although without pointing to any specific provisions in the contract, whether it's conceivable that it can be said that the claim to a carryover of these permanent working conditions to a different employee enterprise can be a claim made under the Interscience contract.

And if it's not, it's obviously not made within the scope of the contract and obviously, therefore, it's not arbitrable.

And the fourth question that we present to Your Honors, is a question that you have now as yet decided on what the Union calls “procedural arbitrability” and who is to decide it.

But we suggest that perhaps you don't have to get to that question because we think apart from arguments pro and contrary and they're argued in full in our briefs and in the Union's and amicus', we don't think this is really a procedural arbit -- arbritrability case.

We think this is a case clearly where arbitration was abandoned as a remedy and where clearly the Union elected to bargain with the Company.

The Company performance talking to the Union on a -- without prejudice basis, without prejudice to explain that the contract was then at an end, and it recognized no rights under the contract.

And that whereas here, after four months of such without prejudice bargaining, the Union got what it wanted.

We think that now, a week before the contract when it files it suit to compel arbitration, never having demanding it, we think this is not a case of procedural arbitrability.

We think this is just clear as I said before, abandoned.

This is a wide territory that -- that we cover in this case.

And each one of these points really makes a case by itself.

But if it's agreeable to the Court, I'll choose to argue at -- at length from the question that, this was the subject of a colloquy between Mr. Justice White and me because I think this is a -- the four new questions, this is probably the newest and that is, how do you reach Wiley?

Justice William J. Brennan: That is your question number one?

Mr. Charles H. Lieb: That's -- that's -- that's right, sir.

How do you reach Wiley?

The Union says, and I distinguish District 65, Mr. Livingston from amicus, the Union says, very simple, “We sue under Section 90.”

The Court of Appeals said, “Well, that doesn't make sense in a labor case.”

And amicus says, “It doesn't make sense in a labor case.”

Now, I think that this Court must agree that the -- this difficult question involving all of these facets of relationships between company, successor company, successor company and employees and successor company and collective bargaining agent can't be decided by a -- of the merger and consolidation statute.

One of the several states obviously have to look to more than that.

So I think the fact is -- is clearly wrong.

I think clearly, the question that we have here is not one of corporate or commercial law but it's a question of labor law.

That does not depend on tactical niceties of a consolidation statute nor we suggest upon the manner, upon the manner by which one company acquires another.

And here, although I argue for the Company, here perhaps, we break ground and argue what many other companies might know or assert what many other companies, counsel for companies might not be willing to grant.

I want to say first, there are four possibilities as I've seen them of how you can reach Wiley.

First is merger and consolidation statute, I think that's clearly wrong.

Second, you can do what the Court of Appeals did which is to say, “Well, Court won't pass on the question that the arbitrator decide everything.”

I think that also is clearly wrong, and I think so does amicus say it's clearly wrong.

The Court must decide it.

The arbitrator can't decide whether a party is to be bound to a contract.

And the fact that Wiley is charged here, not as the signing party but as a successor of the signing party, doesn't author the question.

If Interscience were doing business, the Court would have to decide did Interscience make the contract.

Interscience is no more, Wiley is being sued, the Court must therefore have to decide, is Wiley bound by express assumption of contract, by the terms of the contract or by operation of law?

This is the threshold finding which obviously is a judicial one and not an arbitral one.

The third possibility of holding Wiley is, if you adapt the rule presently in effect, in the lower courts and the Board, and that is that absent a case of alter ego, and this clearly is a good faith merger, except in the case of an alter ego, a purchaser of assets is never to be held to the contract of the predecessor.

Now, it's true that those are contract bar cases.

Those cases were decided in the framework of whether or not the purchaser company, reinstating the operations of the old company, could claim the benefit of the contract that the seller had made with the Union or whether --

Justice Byron R. White: (Inaudible) as in the case?

Mr. Charles H. Lieb: Yes, sir, yes, sir, and we suggest that you can fairly equate a merger such as here, of a company where the stockholders of the merging company acquire a 20% stock interest in the surviving company, we think that you can fairly equate that to an asset's purchase, but we don't argue it.

We don't argue that.

We choose instead to place our opposition on the broader rule which we would suggest that you adopt.

And I think in this, we and amicus are in basic agreement --

Justice Hugo L. Black: (Inaudible)

Mr. Charles H. Lieb: which is that, Wiley could be held to the Interscience --

Justice Hugo L. Black: (Inaudible)

Let me ask you a question because --

Mr. Charles H. Lieb: Yes, sir.

Justice Hugo L. Black: -- I don't quite understand.

Am I right in making the two questions, the number one is this, (Inaudible) claims he has no contract to arbitrate.

Mr. Charles H. Lieb: That's right.

Justice Hugo L. Black: The other people claim, he does.

Mr. Charles H. Lieb: That's right.

Justice Hugo L. Black: And the question is whether that to be decided by an arbitrator or decided by a court?

Mr. Charles H. Lieb: Well, our -- yes, sir, that's the first question, but the second --

Justice Hugo L. Black: But I'm talking about the first question.

Mr. Charles H. Lieb: That's the first part of the first question.

The second part of the first question --

Justice Hugo L. Black: Well, suppose it's decided that the Court is the one that has the right to decide that, why does that in there?

Mr. Charles H. Lieb: Well, because amicus and we are suggesting that this Court on the record can decide the question.

We sugge --

Justice Hugo L. Black: Decide what question?

Mr. Charles H. Lieb: Whether Wiley is bound and that you can find on this record that Wiley cannot be bound.

We're asking -- we're asking you not only to reverse the Court of Appeals, we're suggesting that it may not be necessary for you to remand at the trial.

Justice Hugo L. Black: Well, is that the bottom of this?

The first thing, it has to be decided under number one.

Mr. Charles H. Lieb: That's correct, sir.

Justice Hugo L. Black: Whether when there's a dispute between whether there's a contract to arbitrate, the Court has the right must pass on that first or that you let the arbitrator first.

Mr. Charles H. Lieb: That's correct, sir.

Justice Hugo L. Black: And you and amicus, you say agree?

Mr. Charles H. Lieb: Well, I -- I --

Justice Hugo L. Black: (Voice Overlap) --

Mr. Charles H. Lieb: -- perhaps I'd better not speak too freely for amicus.

Justice Hugo L. Black: (Voice Overlap) --

Mr. Charles H. Lieb: It's my understanding that we are in agreement.

Justice Hugo L. Black: What about the -- those who are not amicus?

Mr. Charles H. Lieb: Well, the Union says that Section 90 of the consolidation statute imposes as a matter of law the obligation on Wiley.

Justice Hugo L. Black: But they -- who do they say decide it?

Mr. Charles H. Lieb: Well, they said --

Justice Hugo L. Black: Did they say that the arbitrator has the right to decide whether the arbitrator can -- can arbitrate?

Mr. Charles H. Lieb: No, sir, they read the Court of Appeals' opinion differently than we do and they construe it differently, then -- then Judge Kaufman in his concurring opinion construed it.

They say that the Court did decide it.

And I think that they --

Justice Hugo L. Black: They say that the Court decided that there was an obligation to arbitrate --

Mr. Charles H. Lieb: Yes, sir.

Justice Hugo L. Black: -- by contract -- by what, by substance?

(Voice Overlap) -- or what?

Mr. Charles H. Lieb: Are you -- you have to let them speak for themselves because they are the ones who -- who --

Justice Hugo L. Black: I don't know who satisfy (Inaudible)

Mr. Charles H. Lieb: Well, sir, they -- they say that -- that Judge Medina in his opinion held that, we, the respondent, are required by contract assumption to arbitrate the questions.

Justice Hugo L. Black: Did Judge Medina --

Mr. Charles H. Lieb: But he did not.

Justice Hugo L. Black: -- said that you had assumed it by contract?

Did he have any evidence on that?

Was any evidence taken with the Court or what (Voice Overlap) --

Mr. Charles H. Lieb: No, sir, no, sir.

Well, he just didn't say it.

This is what the Union says he said.

Justice Hugo L. Black: Well, suppose you did say it, what's it based on?

Mr. Charles H. Lieb: It -- it could only have been based on Section 90.

Justice Hugo L. Black: Of what?

Mr. Charles H. Lieb: Of the New York Stock Corporation Law, the merger and consolidation statute.

Justice William J. Brennan: (Inaudible) is a matter of -- of one of the effects of the merger under that statute.

Mr. Charles H. Lieb: Yes, but --

Justice William J. Brennan: That's what it would be, wouldn't it?

Mr. Charles H. Lieb: Yes, but --

Justice William J. Brennan: It's not an assumption then that's an imposition

Mr. Charles H. Lieb: Yes.

Justice William J. Brennan: -- by the statute.

Mr. Charles H. Lieb: Yes but Judge Medina didn't say that.

Justice William J. Brennan: Well, whether he did or not, you're suggesting that the Union's position is --

Mr. Charles H. Lieb: Yes, that is --

Justice William J. Brennan: -- that section of the statute imposed the obligation.

Not that they volun -- that Wiley voluntarily assumed it.

Mr. Charles H. Lieb: That is exactly the Union's position.

Justice Hugo L. Black: (Inaudible) be held to be a matter of judicial determination can be shifted over to the arbiter I suppose.

Mr. Charles H. Lieb: I don't think that anybody disputes that in this case.

Justice William O. Douglas: Yes, but that would -- that short circuits another question whether or not it should not be preliminary question for the arbiter to come if -- if probably as agreed to a court for review after the arbitration.

In other words, whether or not in our Steelworkers formula -- formula of our Steelworkers case will -- what is left for judicial review whether that would be one of those questions.

Mr. Charles H. Lieb: Mr. Justice Douglas, I don't just don't see how you can reach that point because in your Steelworkers cases, and just last -- this week, in Humphrey-Moore --

Justice William O. Douglas: Yes.

Mr. Charles H. Lieb: -- you said you have to find the obligation to arbitrate in contract, I'll add to that, in contract all by operation of law.

But the Court has defined it.

You can't leave it to the arbitrator.

Justice William O. Douglas: But the question is when does the Court do it?

Does the Court do it now or does the Court do it --

Mr. Charles H. Lieb: Well, I --

Justice William O. Douglas: (Voice Overlap) part of -- for arbitration, that's another alternative.

Mr. Charles H. Lieb: I don't think that -- I don't think that that was ever intimated in your opinion.

Justice William O. Douglas: That's right.

We have never decided it yet.

Mr. Charles H. Lieb: No, no.

I would think that you must -- that the Court must decide it first because otherwise, you're throwing -- then you have the classic case of bootstrap jurisdiction, then you are throwing everything to the arbitrator and saying “comeback and appeal it to the courts”.

They're much more salutary rule, the one that I think most members at the bar read the Steelworkers cases to provide and that is the Court must decide whether the party is required to arbitrate.

Unknown Speaker: (Inaudible)

Mr. Charles H. Lieb: Well, you came pretty close to it in Humphrey-Moore, I thought.

Maybe I won't.

In any event, the rule that we're talking of, the rule that we're suggesting is that, if following the merger, the separate enterprise, they're separately continued and the collective bargaining unit is continued as a separate unit, it would be appropriate to hold the successor whether he's a successor by merger or purchase or reorganizational whatever, bound to that contract.

But we're suggesting that where, as a proximate result of the merger or the purchase, the acquired enterprise is dissolved and -- and absorbed completely.

And the collective bargaining unit looses its identity, then we're saying there can be no carryover.

And the issue, it seems to me, between my friend, Mr. Feller and me, is not as to that rule but as to its application.

He says that if at 9 o'clock on October 2nd, when you file, and I'm exaggerating a little, he says that if on the date of the merger, October 2nd, you terminated the Interscience Enterprise by moving the 40 people over to the Wiley offices right then, 9 o'clock that day, and the Court has to dismiss it.

But he says, “If you didn't move them over that day, then Wiley has become bound by the contract and when Wiley moves them over the next day, it has to arbitrate all the questions, which would not have had to arbitrate, had it moved in at the day of the merger.

We say this can't be the rule.

The rule has to be that if this rule of the continuing employing enterprise or an industrial community is to be adapted and we think it a logical rule, you must give -- you must examine all of the facts and circumstances, as Mr. Feller suggest, and you must examine them over a reasonable period of time and not just at the precise moment of the filing of the merger papers.

And you, is the Court, the trial court and obviously and not the arbitrator because it's a juridical question involving whether or not party is legally bound to arbitrate.

Justice Byron R. White: (Inaudible) Wiley is bound (Inaudible) don't make the arbitration clause reaches --

Mr. Charles H. Lieb: Oh, no we don't.

Justice Byron R. White: -- these kinds of issues --

Mr. Charles H. Lieb: No, we don't.

Justice Byron R. White: -- to survival, the questions of surviving --

Mr. Charles H. Lieb: I -- I would like to touch on that but let me add just two minutes to what I've just said.

This is an appeal from a motion for summary judgment.

When we come to the application of the facts to this case, this is not here, as I said before after trial.

Amicus is -- doesn't sustain the Court of Appeals' opinion if there's -- even if we're wrong in saying that the record shows that there was integration at the date of the merger, all we have to show is an issue because the Union, having gotten the benefit of a motion for summary judgment, has to support it and has to support it by showing that there is no evidence of integration.

And this obviously, it can't do.

And I would like to add the second comment that the burden to do this, obviously, must be on the Union, not only because of moves for summary judgment but more importantly because it must be its burden to establish the nexus between the Union contract and Wiley, a stranger to the contract.

And if it can't rely on Section 90 to do -- do that, it must support the burden of showing a continuing enterprise or showing that Wiley has carried on separate or at least separate Interscience Enterprise as -- as it separate and apart thing from the Wiley business.

Unknown Speaker: (Inaudible)

Mr. Charles H. Lieb: Yes, sir, but we're -- but we're the people who were licked on a motion for summary judgment.

Justice Hugo L. Black: (Inaudible) suppose we sent it back to --

Mr. Charles H. Lieb: No.

Justice Hugo L. Black: -- try the case.

Mr. Charles H. Lieb: No, no.

Justice Hugo L. Black: I don't quite understand why you're insisting that we get into this (Inaudible) for summary judgment.

Mr. Charles H. Lieb: Well, because I would pref -- I -- because I would prefer for you take the record as you find it and if you do, I think that you would find that we are not only entitled to reversal but that we are entitled to an affirmance of the District Court's dismissal.

Now, we come to the question of --

Justice Hugo L. Black: (Inaudible)

Mr. Charles H. Lieb: Well, the record indicates concededly, a physical consolidation prior to the time that this suit was commenced.

Even on amicus' own rule, if at that time, there was a physical consolidation, and if the intervening time between the merger and the physical consolidation was a reasonable theory at that time to accomplish the absorption then as a matter of law, the Interscience Enterprise was discontinued, did not carryover, is not to be found in the Wiley Company and therefore, Wiley cannot be sued.

We have two other questions.

We have the question of arbitrability.

We claim that -- that these so-called “Glidden type questions” are not arbitrable, that they're really not Glidden type questions.

Justice William J. Brennan: Am I right in thinking that is (Inaudible) half hour ago --

Mr. Charles H. Lieb: Yes, sir.

Justice William J. Brennan: -- whether at page 100, at least that much, the Court of Appeals decided whether rightly or wrongly, did not obtain that under the Court of Appeals decides that if you are suable, Wiley, then the issues hounded by the Union are arbitrable under the agreement.

Mr. Charles H. Lieb: Mr. Justice Brennan, I think that the Court merely decided, at page 100, that the Interscience contract in an action against Interscience would have supported -- would have supported these claims.

But if you turn back to pages 94 and 95 --

Justice Byron R. White: Well, that's -- is to be answered to his question that is yes.

Mr. Charles H. Lieb: If it were an action as against Interscience --

Justice Byron R. White: Yes.

Mr. Charles H. Lieb: -- yes.

Judge Medina so held.

Justice Byron R. White: He held that the arbitration clause reached this -- this kind of an -- these kinds of issue.

Mr. Charles H. Lieb: Yes.

Justice Byron R. White: Yes.

Mr. Charles H. Lieb: Yes, he did it as against Interscience.

Justice Byron R. White: Well, I understand that.

But he -- but Justice Brennan said assuming Wiley is the step of the arbitration clause too.

Mr. Charles H. Lieb: Yes, but if you look at -- at what Judge Kaufman said.

And he says at a little bit more concisely on page 110, he says “We hold that the bargaining agreement does not clearly remove from the scope of arbitration the following questions, whether the collective bargaining agreement, as a whole, survived the consolidation.”

And if it did, thereby imposing on Wiley, the obligation to arbitrate at that behest of the Union, the disputes arising before its natural termination, did the Union have to comport with the three-step grievance procedures?

I don't think it's -- I don't -- I don't think, Mr. Justice Brennan, that it is possible to answer these questions separately, and we tried to touch on this in our main brief.

I think this has sort of a gasthof thing effect.

I think the trouble here is that these are really not claims as claims are commonly known “vested claims”.

I think this is a --

Justice Byron R. White: (Inaudible)

Mr. Charles H. Lieb: I don't think that there is -- the claim -- it is asserted that there are claims made to vested rights.

Justice William J. Brennan: (Inaudible)

Mr. Charles H. Lieb: No, but I'm even going further than that.

I'm saying that if you analyze what they're saying that Wiley, after the contract expiration date, must pay the 9% of wages into the Union plan, that Wiley must install a seniority plan and must install grievance and arbitration procedures following the date of the contract because they were provided for in an expired contract.

What they are trying to do -- this is what they're complaining -- asking for, exactly that.

What they're really saying, I think is this, this does not appear in their briefs, they are saying there had -- Interscience never merged and had the Interscience contract expired.

And had there been that hiatus between the expiration of the Interscience contract and the -- and the negotiation and signature to a new contract, that during that hiatus, because the Inter -- Interscience Enterprise had continued and because the employees continued to work as a separate bargaining unit and because the Union continued to represent the employees even though the contract had expired, they are asserting some sort of right of a carryover.

But by the -- on the very face of that claim, these claims cannot carryover to a different enterprise.

So that I'm saying on the face of the claim, on the very face of the claim, it is premised on a continuation of the Interscience Enterprise and when it appears as it does appear here, that the Interscience Enterprise is no more, it must then appear that the claim is not the within the scope of the Interscience contract.

They could just as well be making a claim against the United States Steel Corporation, because if the Interscience Enterprise has not carried over to Wiley, then there is no nexus, there's no connection, you'll never reach Wiley.

And because they are claiming to arbitrate under the Interscience contract, then they're asserting the claim against United States Steel or Wiley, the claim obviously is not within the scope of the contract.

I -- I would like to reserve whatever time remains unless the Court has any additional questions.

Chief Justice Earl Warren: You may (Inaudible)

Mr. Charles H. Lieb: Thank you.

Argument of Irving Rozen

Mr. Irving Rozen: Mr. Chief Justice --

Chief Justice Earl Warren: Mr. Rozen.

Mr. Irving Rozen: -- may it please the Court.

I would like to emphasize first of all, this is an action under Section 301 of the Landrum-Griffin Act, an action to compel arbitration by the defendant.

Unknown Speaker: Taft-Hartley Act.

Mr. Irving Rozen: Under the Taft-Hartley Act.

All we are asking here, Your Honors, is for an opportunity to go before the arbitrator and have the arbitrator tell us what rights passed over and what rights continue and that is all we are asking for.

In the verdict part of his argument, Mr. Lieb was talking about rights and other matters as if we were here now before an arbitrator.

As if we are here now trying to pass upon what these rights are.

We aren't asking Your Honors to tell us what these rights are.

As a matter of fact under the Trilogy cases, Steelworkers cases, that is not part of this Court's job.

If that -- that is for the arbitrator to determine.

Justice Hugo L. Black: (Inaudible) determine, although there is a contract that first binds them to arbitrate?

Mr. Irving Rozen: Of course, not, Your Honor.

And we -- and we have argued in that brief that that was the question which was passed upon by Judge Medina in the Court of Appeals.

And we cite numerous and copious quotations from his opinion, where he specifically held that the matter of substantive arbitrability, whether there is a contract, where there is a promise to arbitrate, is for the Court.

And he held that this Court finds and holds that there is such a promise and that -- and that arbitration should proceed therefore on the question of what the rights are.

The only question that he left open, this is one of the question you have to decide here by Your Honors, is the question of procedural arbitrability, whether or not, the Union complied with conditions of the contract respect the grievance procedure, with respect to grievance steps

Justice Byron R. White: (Inaudible) Court of Appeals decided that Wiley have to arbitrate?

Mr. Irving Rozen: Yes, Your Honor, I think so.

I think he said that in many places --

Justice Byron R. White: I don't think it -- that they -- you don't think it left to the -- one of the arbitrator's questions whether -- whether Wiley is bound to this arbitration clause.

Mr. Irving Rozen: I do not think so, sir.

And I think it's clearly set forth in his opinion to that affect in many places.

He -- Judge Medina recognized the -- the substantive arbitrability and procedure arbitrability.

Our -- our action was against Wiley and Wiley alone because of course that was the legal entity that we could sue.

And the action was direct to proceed against Wiley, the arbitrate is to proceed against Wiley.

The only thing that's left open is the question of what the rights are and how shall those rights be implemented.

I think that's pretty clear from the opinion, sir.

I can read you many places from it whereas -- whereas so held.

Justice Potter Stewart: Judge Kaufman didn't read the opinion (Inaudible)

Mr. Irving Rozen: Well, it's a little bit difficult to understand Judge Kaufman's opinion in that respect.

But I must be frank, Your Honor, Mr. Justice Stewart.

But I think that when you read it together with the majority opinion and where you read the fact that he enthusiastically agrees with it, I think you have to come to conclusion that the majority opinion on the finding that there is an obligation by Wiley to arbitrate, that -- that was passed upon and it was not reserved or send over to the arbitrator.

We all agree upon that question, I believe that -- that it is the Court's duty to determine where there's a promise to arbitrate.

We feel very strongly that the judge in the lower court held that the -- Wiley does have that obligation and we should be given the opportunity --

Unknown Speaker: (Inaudible)

Mr. Irving Rozen: What's that, sir?

Unknown Speaker: (Inaudible)

Mr. Irving Rozen: We urged upon him Your Honor that to large extent, he should rely upon Section 90 of the Stock Corporation Law of the State of New York, because the Stock Corporation Law in the State of New York in cases of merging and consolidations, specifically states that the new corporation has imposed upon it all the obligations of the old corporation.

And we thought that was a very persuasive argument but Mr. Justice -- Judge Medina disagree.

He said, "No, Section 90 does not control us.

Under Lincoln Mills case, we have the right and the duty to fashion our own federal common law on -- in arbitration.

And we will, as a matter of brand new burgeoning federal law on arbitration, we will decide ourselves as a matter of common law what the obligation is.”

And he went through -- they took into consideration Section 90 and -- and replied --

Justice Hugo L. Black: Are you supporting his decision on that ground?

Mr. Irving Rozen: Well, I -- I would --

Justice Hugo L. Black: Did he had a right to fashion that rule?

Mr. Irving Rozen: Well, I think he did, sir.

I think New York cases and Lincoln Mills and the Trilogy cases specifically give the -- the courts the duty to do that, sir.

Justice Hugo L. Black: Fashion a rule to what effect?

Mr. Irving Rozen: A fashion of rule of -- of labor law, of common law in arbitrations as to what the limit should be of arbritatibility and arbitration processes.

This is I think that Constitution and the charter and the by-laws which were laid down by this Court in Lincoln Mills case and the Trilogy cases as to what the federal courts must do.

They must --

Justice Hugo L. Black: Suppose the statute, New York statute does not authorize, what do you say?

Do you still say that the court has the right over a company, has not signed the contract to bargain, to arbitrate that the courts have a right to fashion a rule and say that they must arbitrate?

Mr. Irving Rozen: I think as a matter of law, sir, that that is the fact.

You -- you must bear in mind, Your Honor --

Justice Hugo L. Black: (Voice Overlap) you know they haven't agreed to arbitrate.

Mr. Irving Rozen: Even though, they haven't specifically agreed to arbitrate in writing in a -- in a specifically written document, yes, Your Honor.

Justice William J. Brennan: (Inaudible) believe you suggest that you had to rely on Section 90.

Mr. Irving Rozen: Yes, sir.

Justice William J. Brennan: But what you'd now said, do I correctly understand your position is this, you still think that maybe Section 90 saddles Wallace --

Mr. Irving Rozen: Yes --

Justice William J. Brennan: -- Wiley?

Mr. Irving Rozen: Yes, Your Honor.

Justice William J. Brennan: But you don't have to rely on Section 90.

Mr. Irving Rozen: Exactly so.

Justice William J. Brennan: Because the Court of Appeals had said that the old fashion made a rule, a federal law which will govern this.

Mr. Irving Rozen: Exactly, so.

Justice William J. Brennan: And under that newly fashioned rule, Wiley is saddled with the obligation.

Mr. Irving Rozen: That --

Justice William J. Brennan: (Voice Overlap) --

Mr. Irving Rozen: -- states it exactly correct, yes, Your Honor.

Justice William J. Brennan: Oh, you tell me this.

Would you mind looking at page 94 of the record?

Mr. Irving Rozen: Yes, sir.

Justice William J. Brennan: This is in the opinion of the Court of Appeals.

Mr. Irving Rozen: Yes, sir.

Justice William J. Brennan: This is Judge Medina's opinion.

Mr. Irving Rozen: Yes, sir.

Justice William J. Brennan: Now, he says, “We merely hold that as we interpret the collective bargaining agreement (Inaudible) we cannot say that it was intended that this consolidation should preclude this Union from proceeding to arbitration.

Now, for proceeding to arbitration to what?

To determine the effect of the consolidation on the contract, as well as on the rights of the employees.

Now, why isn't that what Judge Kaufman said it was at page 110, his first question, “We hold that the collective bargaining agreement does not clearly a rule from the scope of arbitration to question one, whether the collective bargaining agreement as a whole provide the consolidation of Interscience and Wiley?”

Why aren't they the same thing?

Mr. Irving Rozen: Well, if you read the whole opinion and just not that one portion --

Justice William J. Brennan: Now, the whole opinion --

Mr. Irving Rozen: -- of judgment --

Justice William J. Brennan: -- the whole opinion just utterly confuses me, I just said but I -- I don't -- I -- I wonder if that -- after all that's in the language of holding that -- that says to me frankly, Mr. Rozen, that the arbitrator is to decide whether the collective bargaining agreement as whole survived the consolidation.

Mr. Irving Rozen: Well, I -- I submit sir that you -- you just --

Justice John M. Harlan: (Inaudible)

Mr. Irving Rozen: -- can't --

Justice John M. Harlan: (Inaudible) as the Court has held he brought on page 93 (Inaudible)

Mr. Irving Rozen: Well, that's what I've been trying to say.

Thank you for saying it.

But I -- in my brief, I -- I quote from several places of Judge Medina's opinion where he clearly shows that he understands what the substantive arbitrability is.

He clearly understands that he is, in fact, holding that -- Wiley's obligation to arbitrate.

He is being passed upon and he does, in fact, direct that.

And I think that the whole opinion does convey that distinct and definite finding and holding, sir.

I would like, if I may, to refer to the statements made Mr. Lieb about when the physical change overtook place.

But this does not appear in the printed transcript of record but it does appear in the typewritten record.

And there was referred to in the Court of Appeals' brief by Mr. Lieb, I'm reading from page 5 of his Court of Appeals brief.

I'm reading from a letter that Wiley sent on September 21, 1961 to the employees.

And our letter clearly shows that was impossible for there to be any integration, any accretion, any disappearance of the Interscience units, until long, long after October 2nd, 1961 which is the date of the actual technical merger in the Secretary of State's office up in Albany.

They tell the employees that the -- it needs to be for long when suitable quarters have been arranged, you will change your place of work.

Until the move, work will continue as now at these offices, meaning the Interscience offices at the old stand.

Then they go on to last paragraph and say, “Plans for the move should be completed within a few months, plans for the move should be completed with a few months.”

Unknown Speaker: (Inaudible) the move takes place?

Mr. Irving Rozen: We don't actually know and there's nothing in the record on that fact.

I've searched the record carefully.

I've looked at the references to the record made by Mr. Lieb and I can't find --

Justice Byron R. White: Well, assuming Interscience will have two plants, there was no merger and one was organized and one wasn't and it discontinued to organize the plant, took the employees together in one plant and -- and there was no -- and the Union no longer had a majority, what is the consequence upon a labor contract if it has still had a year to run?

Mr. Irving Rozen: Well, I would say it may depend upon where the labor contract is being tested.

I would say that if it was being tested as we've tried to test it, that the -- the contract would continue.

Judge Medina in his opinion says the essence of this case --

Justice Byron R. White: But your position is even though the Union has no majority of the -- of the employees in that plant which is now -- all the employees are in one plant and the Union has no majority, does the contract goes on and the Company continues to be bound by the arbitration clause in the Company.

Mr. Irving Rozen: Yes sir, it does because the contract is a contract.

I say it's a sacred document that has to be observed and followed and -- and until it reaches its end either by operation of law or otherwise.

Justice Byron R. White: (Inaudible) Interscience had only one plant and it didn't merge, does the contract has to be expired in accordance with its term --

Mr. Irving Rozen: Yes sir.

Justice Byron R. White: -- was -- is Interscience bound the next day after the expiration of the contract to arbitrate?

Mr. Irving Rozen: It is bound, sir, to arbitrate rights which created during the life of the contract.

Justice Byron R. White: But not -- not of the -- not down to arbitrate the events that took place the day after the contract is terminated.

Mr. Irving Rozen: If -- if those events which took place the day after the termination of the contract have no relationship, have no root of foundation in the -- those matters which grew -- grew up or accrued or became vested during the life of the contract, then of course, arbitration --

Justice William J. Brennan: Well (Voice Overlap) --

Mr. Irving Rozen: -- could not be held.

Justice William J. Brennan: -- Mr. Rozen --

Mr. Irving Rozen: Yes, sir.

Justice William J. Brennan: -- what about the undertaking the pay into the pension plan?

Suppose Interscience or whatever the -- this company is, had not been merged, the contract ran out, weren't able to negotiate a new agreement, three months after the expiration date and not a payment is demanded on the part of the Union, would Interscience had to pay or go to arbitration (Voice Overlap) --

Mr. Irving Rozen: This is really a question which should not be asked in this proceeding, Your Honor.

We are -- that is one of the questions we are asking the arbitrator to pass upon.

This is what Judge Medina says, tempting as it is for me to do something and say something about this.

I must resist that temptation because this is an action to compel arbitration, an action to go the arbitrator to give the arbitrator a chance to tell us what those answers are.

Justice William J. Brennan: (Inaudible)

Mr. Irving Rozen: But I have an answer for you if you want it.

Justice William J. Brennan: Your answer to me would be whether or not the Company's obligation survive the termination of the contract, would be an arbitrative -- arbitrable question on the contract itself.

Mr. Irving Rozen: That's right, Your Honor, but we would --

Justice Byron R. White: But you wouldn't have to say that -- that you might have the -- the Company might have the obligation to pay the pension plan but might not have the obligation to arbitrate.

And then it might be -- the Company might be able to recover the money from (Voice Overlap) --

Mr. Irving Rozen: Well, there might -- possibly, there might be a distinction.

Justice Byron R. White: Except the arbitration clause has expired.

Mr. Irving Rozen: There might a distinction but I don't think so, Your Honor.

I would say, no.

I would say, even though the arbitration clause has expired because that's the end of the contract, I would say that the obligation to make contributions to the pension plan were -- were vested, were created -- were -- a right that during the life of -- of the contract.

Let us a take a case for example, where a union's been in collective bargaining agreement with the company for let's say, 25 years.

And during that period of time, there's been pension plans and pension contributions enforced.

Justice Byron R. White: Will you pay for that?

Mr. Irving Rozen: And each year they've had two years, each two years have had negotia -- did you ask question, sir?

Justice Byron R. White: Would any item -- would any -- would any matter survive the contract then arbitration -- the arbitration clause automatically survive, would it?

Mr. Irving Rozen: I would think so.

Yes, Your Honor because the -- the grievance arises during the life of the contract.

Their vested right to -- created were a right during the life of the contract.

Each two years have, in the example I was about to propose to Your Honor, there's been negotiations for wages and other things and the -- the most important attributes of a collective bargaining relationship is a pension plan, is the fact that when I get to be 65 or more, I'll have something to -- to protect me in my old age.

So we give up rights for -- for increased wages.

We give up rights for vacation pay.

We give up rights for a number of other things so as to get that pension plan, to get those pension plan contributions.

And -- and we -- and we get those rights in that way.

After 25 years of service, the company, lets say, says “No, I'm not going -- I'm not going to bargain with you anymore.

We're all through, we're not going to make the more contributions to your pension plan”, as -- as emphasized in this case.

Exactly -- that's what exactly happened.

And as -- as the employee to left high and dry, are all the -- the rights which has been created, all the promises that were made from all the years of -- of bargaining, all to go for north, we say there was a consideration on actual legal consideration, a quid pro quo, every two years for that pension plan contribution.

And now, there's a mere fact that the plan -- that the Company's contract has terminated according to a termination clause in the contract, does that mean that were -- were employees go through?

We --

Justice Byron R. White: You're saying the contract didn't terminate in that respect.

Mr. Irving Rozen: We say did not terminate in that respect.

We say that this arbitration right to the Union to find out what it -- what -- what should go on there?

What should happen there?

And this is what we're asking.

This is all what we're asking.

We really shouldn't be engaged in this discussion at all because this is the ultimate -- this is -- this is the kind of discussion I expect to be arguing and talking to when I get before the arbiter, if I had to get to there with Your Honors permission of course.

So I -- I say that -- in addition to our letter, I'd like to read you or Mr. Lieb's affidavit at page 58 of the record, this is again in connection with the physical transfer.

And he here is, on September 19, 1961 talking to me and to my associates and here's -- here's what he said, “I said that although the physical transfer for me to sign to Wiley premises, would not be made until later of the year.

It was Wiley's position that on October 2nd, automatically, without anything more, on October 2nd when the merger became effective, the collective bargaining unit would disappear at Interscience and be merged and be absorbed by the larger Wiley.

So here, I've read Your Honors two statements by the Company itself telling us that there is not going to be disintegration, desecration as of the date of the merger.

And that is why Judge Medina in his opinion states that the position, on page 89, he states that the position of the Company was that the agreement automatically, this is an exact quotation, "Automatically terminate for all purposes, the agreement by the consolidation."

So I say to you -- Your Honors that that has been the legal question of law that Judge Medina passed upon.

There's no factual issues before him because the Company's, as he finds and as their letter shows, took that position and on October 2nd, there was an automatic termination, Union was through, the employees are through, no more rights, nothing.

And the fact is that nobody knows.

The record does not show when it did take place.

Now, I'd like Your Honors to bear with me while I explain Mr. Lieb's statement that there's no prior demand for arbitration.

I concede that there was no formal document asking for arbitration.

That is true and that possibly what he refers to, although I don't think so.

The fact is from June 27th of 1961, when I addressed my first letter to Mr. Lieb advising him that there were knowledge of the impending merger and our insistence upon the continuation of the contract, upon our insistence upon the continuation of the rights of the employees until down to the very commence of the action, we were engaged in almost one long continuous process of -- of talking, of negotiations, of trying to work this problem out, of -- of advancing into each other's arguments and issues as to what the rights of employees were informed to do something about it.

And this was not held at the level of the shop steward or the Union employee in the shop.

Of course, it would be slightly ridiculous to think that such a problem could be handled in that way.

This was handled at top level.

Mr. Lieb, myself, Mr. Livingston, the President of our Union, Mr. Robinson, the Secretary-Treasurer of the Union and Mr. Lobdell, who was Vice President and Treasurer, I believe, of Wiley.

Unknown Speaker: (Inaudible)

Mr. Irving Rozen: Exactly, so.

Justice John M. Harlan: (Inaudible)

Mr. Irving Rozen: Yes.

Justice John M. Harlan: (Inaudible)

Mr. Irving Rozen: Yes, Your Honor, but I thought I -- I'm --

Justice John M. Harlan: Therefore, you don't reach the merits (Inaudible)

Mr. Irving Rozen: You don't reach the merits, Your Honors, no.

But I wanted -- I wanted to talk about that because I wanted to go into the question which I think impelled Your Honors to grant certiorari in this case and that is the question of procedural arbitrability.

Justice John M. Harlan: There conflicts (Voice Overlap) --

Mr. Irving Rozen: There's the conflict in issue in the various circuits.

And that's the question you have to decide.

But I wanted to lay that question in its proper background because otherwise, wrong impression might be gotten his -- this all of a sudden, out of the blue, we start an action without any prior talks.

Here we had talk after talk after talk, meeting after meeting, conference and conference, response and telephone conversations, all discussing these issues and these problems and trying to work something out.

And we told them time and again, is -- is set forth in our affidavits in the record, we told them time and again that if we couldn't resolve them, we would have to go arbitration, we'd had to go to litigation and they -- could -- we couldn't get together so we had to start this suit as -- as -- which is now here pending.

Unknown Speaker: (Inaudible)

Mr. Irving Rozen: I think so, yes, Your Honor.

On the merits of that issue, I do think so because I think that, as this Court itself held in the -- in the --

Unknown Speaker: (Inaudible)

Mr. Irving Rozen: Well, the only question is -- I think you do have to reach it, Your Honors, because it's a question of procedural arbitrability and not --

Justice William J. Brennan: Well, not only that -- what -- the things you just said to us were not in the (Inaudible)

Mr. Irving Rozen: Well, yes they are.

Justice William J. Brennan: You mean about all these conversations with --

Mr. Irving Rozen: Oh, yes.

Justice William J. Brennan: -- Mr. Lieb's are all in the record?

Mr. Irving Rozen: Oh, yes, all in the record, yes, Your Honor.

This is what we -- we were advanced in -- in our motion papers in the District Court in our affidavits, it's all in the record.

But I think if -- I think you have to decide the question of procedural arbitrability because you may not want to get into this question of whether or not this constitutes compliance with the conditions of grievance machinery.

I mean, I want to get into whether -- whether there was a waiver by the defendant by them.

You mean I want to get into the question whether when they came into our office or we came to their office and we said to them -- and they said to us, “Look, there's no contract, there's no Union, we're just sitting down here without prejudice,” and this is what they said each time, “We won't never, never in a million years,” they kept saying to us, "Consent to your theory that you represent these employees, that these employees have rights as we can do something for you."

That was their position all the way through and we tried to argue them out of it, we try to work something out with them, we couldn't do it.

I -- we think that the arbitrator when -- if Your Honors agree with my position that procedural arbitrability is for him, we think the arbitrator will ultimately decide that issue that this was substantial compliance, that there was a waiver that the -- that the arbitration clause does not call for this -- for step by step adherence.

It's at page -- I think you should read the arbitration clause at page 27 of the record, Your Honor.

And this leaves me to my -- my question that I'm trying to discuss now as to whether procedural arbitrability is for the arbitrator for the Court.

As Mr. Justice Harlan indicated that there is a conflict and I think that was the big issue in this case as to why this Court was kind of guess as to why this Court grant a certiorari.

But I -- I don't think that --

Justice Hugo L. Black: (Inaudible) we do have to pass on whether the federal rule, Judge Medina formulate (Inaudible) his right.

We have to pass on that, do we not?

We either have to approve it or disapprove it, do we not?

Mr. Irving Rozen: Well, on the -- on the question of substantive arbitrability as to whether or not he was right in holding that Wiley --

Justice Hugo L. Black: Well, I want to see if I can get this clears my mind.

Mr. Irving Rozen: Yes, Your Honor.

Justice Hugo L. Black: As I understand it, what you held was that where a company has collective bargaining agreement with a union, that company is bought out or absorbed by a company that has no such collective bargaining agreement, that the federal rule from now on is that the company that bought it out and absorbed it, becomes liable under the collective bargaining agreement --

Mr. Irving Rozen: Yes, Your Honor.

Justice Hugo L. Black: -- that that's the federal rule that we find.

Mr. Irving Rozen: That's right.

And I'd like to add onto that, Your Honor, that traditionally --

Chief Justice Earl Warren: Finish your sentence (Voice Overlap)

Mr. Irving Rozen: Thank you very much.

Traditionally, there's been a distinction between an "assets deal" so-called and a "stock deal" so-called.

The courts have held that where you buy the stock of a corporation, of course, the corporate entity continues and the -- and the corporate -- corporation continues liable on the collective bargaining agreement.

But where you have an assets deal, where you buy merely the physical assets, then possibly, the contract does not continue to the -- to the new purchaser.

But we say this was a stock deal.

That was one of our arguments to Judge Medina.

This was a stock deal.

A merger is nothing more than a purchase of the stock of one corporation and -- and giving a stock the other corporation exchange.

Thank you very much, Your Honors.

Chief Justice Earl Warren: (Inaudible)

Print this transcript Transcript: 

Argument of Thomas E. Harris

Chief Justice Earl Warren: -- Incorporated, Petitioner, versus David Livingston.

Mr. Harris, you may proceed with your argument.

Mr. Thomas E. Harris: May it please the Court.

I am appearing as counsel for the amicus, the AFL-CIO by courtesy of counsel for the respondent here.

I wish to address myself principally to the question whether Wiley is bound by the agreement to arbitrate under the collective bargaining agreement entered into between the union and Interscience.

Now, viewing this question simply as one of private contract law, Section 90 of the New York Stock Corporation Law with control and Wiley quite clearly, under that state statute, would be bound by the collective bargaining agreement, at least up until the point that it expire.

However, we agree with counsel for petitioner and with the court below that this is not a matter of state law, but of federal labor relations policy which is controlled by federal doctrine derived from the Labor Management Relations Act and decisions of the Board, and other sources.

While the state law might be taken over as a part of federal law, if it were given any effect, it would be by that sort of adoption rather than simply by its own standing.

In general, we think that the relations between an employer, a union, and the employees are not controlled either by state law nor yet by a private contract or agency law, but rather by the Labor Management Relations Act and the principles derived therefrom.

For this reason, a collective bargaining contract is quite different from an ordinary contract.

The union selected by a majority of the employees and an appropriate bargaining unit is by federal statute the exclusive bargaining representative of all of the employees.

It can bind dissenting employees, employees not yet fired and the employee here must deal with it whether the employer wishes to or not.

If the employer in the union reached agreement, they must embody that agreement in a written contract.

This contract in turn is binding on all employees including dissenters and people hired thereafter.

The opportunity of the employees to dispense for the one union as their collective bargaining representative and to supplant it with another is quite limited by a federal law.

The contract itself is not a simple private contract but a code for the industrial community.

As this Court said in Warrior & Gulf Navigation, it is an effort to erect a system of industrial self government.

Now, the National Labor Relations Act likewise regulates and in some detail, the rights of parties to collective bargaining agreements to terminate or modify them.

That regulation will be found in part in Section 8 (d).

Finally, the National Labor Relations Board doctrine likewise controls whether an employer must continue to deal with the union as the exclusive bargaining representative notwithstanding changes and the methods of an employer doing business as when the business is sold or when the method of operation has otherwise changed.

Now, the petitioner suggests that this body of Board doctrine as to when an employer or in what circumstances an employer must or need not continue to bargain with the union as exclusive bargaining representative, should also control whether an outstanding and unexpired collective bargaining agreement continues in effect.

We agree with the counsel for the petitioner that in general, this body of doctrine should control for this purpose.

Now, what is this body of doctrine?

In general it is that if the operation of the enterprise is so drastically changed that the old industrial community is dissolved.

The old bargaining unit then becomes inappropriate.

The employer has no further obligation to bargain with the union as exclusive bargaining representative in that unit.

Now, this -- this salute --

Justice Byron R. White: So, do you -- do you suggest that that event or that set of fact never came about at any point in this case?

Mr. Thomas E. Harris: No, Your Honor and I will come to that.

We think it is quite clear that it did not come about for several months whether it ever came about, we don't know, but I will come to that in more detail.

Now, the petitioner quotes and for the decision of the Board in Cruse Motors which summarizes the Board doctrine as to the obligation of the employer to continue the deal.

A mere change -- and this is a quotation from the Board.

"A mere change in ownership of the employment enterprise is not so unusual a circumstance as to affect the certification.

Where the enterprise remains essentially the same, the obligation to bargain of a prior employer devolves upon his successor and title."

The form that the change of ownership takes is immaterial.

That is whether it's a sale of assets, a merger, or consolidation, or a stock purchase.

It's the continued existence or lack of it of the industrial community that is decisive.

Indeed, transfer of ownership is by itself irrelevant for this purpose.

An employer may, without any change in ownership, so hold to his operations that a bargaining unit that was formally appropriate is dissolved or submerged in a larger unit or that a new unit is created.

If that happens, he is no longer obligated to bargain with the union certified for the whole unit.

Of course the collective bargaining agreement may inhibit the employer in making changes that will destroy the collective bargaining unit but if it does not, this problem can't arise even without any sort of change of ownership.

Now, if by reason of the changes and operation, the old industrial community disappears and a new appropriate bargaining unit comes into existence in which the union represents only a minority and that is what the petitioner says happens here.

Then we would agree that it's probably an unfair labor practice even for the employer to continue to bargain with the union as exclusive bargaining representative for all of the employees.

Unknown Speaker: (Inaudible)

Mr. Thomas E. Harris: I say that -- that the employer here contends, the petitioner, and this is what they contended from even before the merger took place.

That where one -- where the method of operation is so changed that the industrial community is dissolved, and the old group of employees is merged into a different and larger group of employees so that the union now represents only a minority and what is now the appropriate bargaining unit.

They say that the employer is under no obligation to continue to bargain with the union as the representative of the unit.

And indeed we agree with that, we think that given that set of facts.

Indeed, it is probably an unfair labor practice for the employer too.

This Court has held for example that it is an unfair labor practice for an employer to make a contract with a minority union as the exclusive bargaining representative for all of the employees.

That was the holding a couple of years ago in International Ladies Garment Workers, the --

Unknown Speaker: (Inaudible)

Mr. Thomas E. Harris: Our answer to that in this case is that that is not this case.

The record here quite clearly shows that the Wiley employees, the Interscience employees, continued to work at the old Interscience Plant for some months after the merger.

The record is silent as to when they were finally, physically moved to the Wiley plant.

I believe counsel for the petitioner stated that it was early in January of 1962.

But the record is quite clear that no such change took place immediately upon the legal merger which was October 2nd, 1961.

That for some months thereafter, the old Interscience employees continued to work for Wiley at the old Interscience plant just as before presumably under new management.

Presumably there was a change in the top personnel other than Mr. Lieb who survived, as we say the industrial community, did for some months.

Now, as to what happened around the end of the year, at that point, the employees were moved physically to the old Wiley plant.

Justice Tom C. Clark: (Inaudible)

Mr. Thomas E. Harris: The intention -- at the time of the merger, the position of the petitioner was that the contract would automatically expire at that point.

The contention of the union was that it did not expire.

The very point which is here at issue before the Court was debated between the parties through the summer of 1961 preceding the merger and they reached no agreement upon it.

Justice William J. Brennan: As I understand Mr. Lieb to say that the program by which the change over from the old Interscience to the Wiley building and the -- and the intermeshing of -- both the workforces and everything else had been planned to the union knowledge as a process which would take several months and that I think he told us and in fact that from about October 2 to about January 1956 or something like that.

Now, would that have any significance on -- on your position?

Mr. Thomas E. Harris: It would not --

Justice William J. Brennan: (Voice Overlap)

Mr. Thomas E. Harris: It would not have any significance on our position that the old unit survived and that the union retained its status as exclusive bargaining representative and that the contract continued in full force in effect unless and until that physical shift took place.

The fact that the employer announced that it was going to take place sometime could not, in our view, affect the status of the union as bargaining --

Justice William J. Brennan: Suppose the --

Mr. Thomas E. Harris: -- representative or the continued validity of the contract.

Justice William J. Brennan: Well, suppose the employer had announced before October 2, a shift would take place over the period from October 2 to January 2, and it did in fact take place between October 2 and January 2.

Does that make any difference in your position?

Mr. Thomas E. Harris: It would make some difference because I think that -- I think that the arbitrator could well find that the employer's responsibilities under the contract differed after the physical merger of the two work staff.

Justice William J. Brennan: Did you say that -- (Voice Overlap)

Mr. Thomas E. Harris: Now, let me say first that even after the physical -- even after the Interscience (Inaudible) employees were transferred physically to Wiley that we do not know that the old Interscience union disappeared at that point.

These employees were a unit of clerical and shipping employees.

Now, if for example they were shifted to Wiley and that Wiley they continued to handle the shipping function which they had handled theretofore and remained a desperate and unidentifiable group of employees, quite conceivably the bargaining unit could have survived even when -- after they moved their place of work a few blocks.

But the record is silent on what happened to these employees at that point.

If on the other hand they were scattered out, interspersed inextricably among the Wiley employees, then presumably the bargaining unit disappeared.

But the record doesn't answer that.

All it shows is that it survived for some months.

What happened after that, we don't know.

Justice William J. Brennan: On the premise that they were dispersed in the Wiley organization when according to a plan announced to the union on -- that would be made effective on October 2 and the union was told about it before October 2, and in fact was completed by January 2 according to plan on all those premises.

What is your position as to arbitration?

You said that arbitrator might find something.

Mr. Thomas E. Harris: Yes.

Justice William J. Brennan: Is it -- is it the very issue here whether there's any obligation to arbitrate at all?

Mr. Thomas E. Harris: Yes.

Now, I think that that question whether there is any obligation to arbitrate at all, is answered very simply by the fact that the unit and the contract did survive for some period after October 2nd.

Justice William J. Brennan: Even though, it survived only according to this plan of (Voice Overlap) --

Mr. Thomas E. Harris: Even though it planned -- it survived pending in plan --

Justice William J. Brennan: So why do you say that?

Why do you say that?

I don't follow that.

Mr. Thomas E. Harris: Because under the doctrine argued urged both by petitioner and us, as long as the old industrial community survives as an identifiable community and it's not submerged in a new one, the union retains its bargaining status and retains its -- and that we -- we think that the contract should continue on effect.

Justice William J. Brennan: But -- well --

Mr. Thomas E. Harris: Now --

Justice William J. Brennan: I don't follow the --

Mr. Thomas E. Harris: -- now, the petitioner's --

Justice William J. Brennan: You -- you didn't -- you didn't try to force arbitration until after January 2 as I understand it, and you brought this action in January 23 and by that time, on a hypothesis I've given you, the bargain unit had disappeared.

Now, why -- what -- what about the -- I don't quite understand why it is that merely because it took -- as I would suppose in any -- any basis of common sense it might have to take, a little while to complete the intermeshing of the two organizations.

By the time you got around the seeking arbitration, the old unit was gone on my hypothesis.

Mr. Thomas E. Harris: Well, if the old unit survived and the contract survived for some period of time after October 2, then the union is entitled to arbitrate as to what its rights under that contract or what the rights of the employees under that contract are.

That would be true even if the arbitration had not been brought and then after the contract run out which was indeed the situation in American manufacturer.

Justice Byron R. White: Then it was true here.

By the time you asked -- have you asked arbitration before the contract expired but after on Mr. Justice Brennan's --

Mr. Thomas E. Harris: But the union --

Justice Byron R. White: -- hypothesis there was a dissolution of the bargaining agreement.

Mr. Thomas E. Harris: The union never did ask arbitration.

What happened was that there were long negotiations between the union and the company.

The union, Interscience, and Wiley in the course of which Interscience and Wiley flatly took the position that the contract would automatically terminate on October 2 when the legal merger went into effect.

The Company did agree to pay certain benefits to the employees under the contract but it took the position that it was doing this voluntarily, that the contract was automatically out of existence.

Finally, when these negotiations were at an end and the Company adhered to its position that it would not recognize the contract for any period after October 2 or recognize the union --

Justice William J. Brennan: Well your (Voice Overlap)

Mr. Thomas E. Harris: -- then the union brought suit.

Justice William J. Brennan: As I understand it, Mr. Harris, your whole case depends upon this set of facts as establishing the continued existence of the industrial community, does it?

After the effective official --

Mr. Thomas E. Harris: No, I don't think it does Your Honor.

And let me go on now and tell you what I think would be the difference after the -- assuming that the Interscience industrial community was at some point submerged.

Let me tell you what effect I think the contract might have been.

And you will see that my answer to your question is that it does not depend on that but that the employer's liability under the contract would be broader for the period that the old industrial community survived.

Now, these questions which I will come to now, I think are questions for the arbitrator, not questions for the Court.

But I will indicate what I think the arbitrator might decide by way of indicating what difference I think the submergence of the community would make.

Justice Arthur J. Goldberg: (Inaudible) responsibility of the Court to decide.

Mr. Thomas E. Harris: I think that the only responsibility of the Court is to decide whether Wiley was bound for any period by the agreement to arbitrate.

I think that is a question for the Court.

Now, assuming --

Justice William J. Brennan: (Inaudible) which is to say then, he -- you say Wiley had that obligation and the courts so hold.

As I understand it, by reason of the events after October 2 and before January 2 on my hypothesis, you say it doesn't actually so in taking that hypothesis.

You say that Wiley is bound by reason of the events between October 2 and January 2, don't you?

Mr. Thomas E. Harris: I do.

I say that by reason of that, I say if the contract continued in full effect until the industrial community was submerged assuming that it eventually was which the record is silent on.

But I would say that the contract has some effect even after the -- even assuming the disappearance of the indust -- the old Interscience industrial community.

Justice William J. Brennan: What effect does that (Inaudible)?

Mr. Thomas E. Harris: That -- that is what I want to come to now, and it will be in terms, I think, of what the arbitrator might decide.

I --

Justice William J. Brennan: That doesn't help me Mr. Harris, frankly.

I thought (Voice Overlap) --

Mr. Thomas E. Harris: Well -- well, I think it -- I think it --

Justice William J. Brennan: What do we have to decide?

Mr. Thomas E. Harris: Well, I think -- I think it's an easy case for you.

I think that all that you have to dec --

Justice William J. Brennan: Well, you may but I don't find it.

Mr. Thomas E. Harris: I think all that you have to decide is that Wiley is bound by the agreement to arbitrate that that could be decided simply on the fact that the old industrial community continued in existence for sometime after October 2.

Justice William J. Brennan: Well, that -- that's -- (Voice Overlap) --

Mr. Thomas E. Harris: I -- I don't think the Court --

Justice William J. Brennan: -- having my difficulty.

Mr. Thomas E. Harris: I don't think the Court need decide what the rights under the contracts are or which provisions of it continued in effect, under which circumstances.

Justice Byron R. White: Well, that is precisely the arbitration clause continued into effect --

Mr. Thomas E. Harris: For some period after October 2.

Justice Byron R. White: Well, it has been decided, it lasted up until the time you asked that you requested arbitration?

Mr. Thomas E. Harris: No, because Your Honor -- because even if the contract had expired, you can ask arbitration under an expired contract.

If the substantive rights you --

Justice Byron R. White: arose under the --

Mr. Thomas E. Harris: -- seek to vindicate arose under the contract.

Justice Byron R. White: Exactly.

Exactly, but that is a -- that is a very bootstrap argument, I mean, (Voice Overlap) --

Mr. Thomas E. Harris: Well -- well, let's look at what the -- let's look at what the arbitrator might decide.

Assuming that at some point, the old industrial community and the old collective bargaining unit disappeared.

First, I think the arbitrator and I am talking only about the latter part of the period and upon petitioner's assumption that the old Interscience employees were submerged in the body of Wiley employees.

Now, up until that happened, I think the arbitrator can enforce the full contract.But after it happened, I think there are some parts of the contract that he could enforce and some that he couldn't.

For example, the exclusive bargaining clause could not be applicable assuming a new unit at Wiley where this union is not the exclusive bargaining representative.

The recognition clause of the contract, Article 1, Section 1, couldn't be enforced.

I think the same thing is true as to the union shop provisions.

The old contract could be expired only to the old Interscience employees obviously, not to new hires.

However, even assuming the submergence of the old community, what reason is there why the contract should not be applied to the old Interscience employees as respects such matters as severance pay and accrued vacation pay.

Now, the petitioner actually did pay the severance employee pay provided by the old contract to 11 employees who quit when they were moved over to Wiley.

Petitioner has searched in its brief that if they accrued vacation pay through the end of the contract.

Though the record is silent on that, the payments to the welfare and pension plan under the old contract or in exactly the same status, these are accrued financial rights.

Why should not those rights be enforced under the contract?

Whatever happened to the old industrial community?

Now, when you come to seniority rights, the question for the arbitrator would be, whether the contract conferred rights surviving the expiration of the contract.

In Zdanok v. Glidden, the Second Circuit held for example that that particular contract did contain seniority rights, rights as to rehire and recall which survived the expiration of the contract and the shutting down of the plant and its movable to a new location some hundreds of miles away.

If the arbitrator found that the contract was intended to confer seniority rights which survived its expiration, the further question would be, "How are these rights to be applied in the chain circumstances?"

That is how can -- assuming that there are seniority rights under the expired contract, how can this be given to the old Interscience employees in the new work -- framework at Wiley.

Now, the petitioner argues that once the operation is so changed that the bargaining unit disappears which it asserts happened in early January of 1962 and that they had in mind all the time.

They assert that once that happens, the employer is no longer bound to deal with the union.

Indeed, that it can no longer properly deal with it as a matter of federal labor relations policy.

However, there is no federal labor relations policy against the enforcement of contracts of a minority union, assuming that it's a valid contract, when there is no majority union in the plant.

In Retail Clerks International Union v. Lion Dry Goods, 369 U.S. 17, this Court held that a contract entered into by a union which had lost its majority during the strike, this was a contract dealing with the settlement of the strike providing for reinstatement of the strikers covering certain other points.

This Court held that that contract was enforceable by the union under Section 301 even though a union had admittedly lost its majority in the plant.

Indeed, as long as there is no exclusive bargaining representative in the plant, and no exclusive bargaining contract covering the plant, there is no federal policy against individual employment contracts.

An individual worker can enter into an employment contract with the employer and that contract will be enforced so long as there is no collective bargaining representative and no contract which undertakes to supersede that individual contract.

If the contract is in -- is for the purpose of forwarding collective bargaining or if the employer refuses to bargain because of the individual contracts, then the contracts should be void under this Court's decision in J.I. case.

But there is no federal policy in general against either individual contracts or minority union contracts.

Now, if another union were certified as the exclusive bargaining representative at Wiley, then perhaps this union could no longer enforce the contract.

Perhaps the new union would become the agent even to enforce rights which survived under the old contract.

And of course, the new union could enter into a new contract which might change the rights under the old contract with the exception of such individual rights as it indivisibly vested.But that is not the situation.

There is no new union here.

There is no new contract.

And simply as the holder of the contract, though not perhaps as the exclusive bargaining representative, the union surely still has status to enforce whatever rights survived under the old contract.

We believe that -- that the federal policy should favor enforcement of the collective bargaining agreement and protection of rights accruing under it notwithstanding such matters as changes of ownership as indeed the Court of Appeals felt.

The Labor Management Relations Act is concerned with promoting industrial piece not with such technicalities as whether a plant is required by stock purchase, merger, asset purge -- merger.

Here, actually these technicalities support the union's position and it could prevail under the New York law if that were applicable.

But we think that that is not the main point.

The National Labor Relations policy favors the enforcement of collective bargaining agreements as a means of promoting industrial harmony.

It so states in numerous pace -- places.

It provides a special forum, the federal courts under 3012 enforcement.

And as I said, there is no federal policy against enforcement even after a union loses its majority status.

Finally, the denial of enforcement, would this involve -- manifest injustice?

These employees would be denied their bargain for quid pro quo and they would be denied whatever they gave up to get the collective bargaining agreement when it was negotiated.

Finally, let me state again that while I have discussed these questions as to what an arbitrator might hold the liabilities to be under the contract.

One, before the physical consolidation to even assuming a physical consolidation, that I don't think that any of these questions are for the Court.

I think that all that is for it now is the question whether Wiley was bound for some period of time to arbitrate on the old agreement.

And we submit that it clearly was.

Now, what I have said -- again, I would like to repeat that under the Labor Board doctrine which is applicable here, it wouldn't matter really whether any merger of companies or any change of ownership at all had taken place.

As I have said, it is quite possible for a single employer with no change of operation to so change his method of operation as to destroy the bargaining unit and as to undercut the statutory duty to bargain with a union for that unit.

Even there, we would take the position as we do here that the employer continues bound under the old contract.

And that the union has standing to enforce it, unless and until there is some new union that negotiates a new contract that supersedes it.

Thank you.

Chief Justice Earl Warren: (Inaudible)

Argument of Charles H. Lieb

Mr. Charles H. Lieb: Mr. Chief Justice, and if the Court please.

It seems to me that Mr. Harris in his argument, he mentioned essential point here.

He suggests that even though the union lost its representative rights at the time when the Interscience employees were merged into a much larger Wiley group that nevertheless those employees might continue to have individual contract rights.

They may, but that is not the question here.

The question here is not what rights due the employees coming over from the Interscience and being put into the Wiley establishment.

The question is not here as to what rights if any of those employees may have.

The question here is whether the union which formally represented those employees and upon the collective -- in a collective bargaining group and which now no longer represents them may arbitrate, not may sue for them.

It's conceivable that these employees having rights hypothetically had given powers of attorney to -- to the union to sue in behalf of John Jones and John Smith to vindicate personal rights.

It's conceivable that such a lawsuit might have been commenced not by the union in a representative capacity but by the union as an attorney for a particular individual.

This proceeding, however, is an application to compel Wiley to arbitrate with the union under a contract which is no longer effective in which became ineffective when the Interscience Industrial Community was dissolved and terminated.

At that time, whatever I say, I say again.

At that time whatever the individual rights may have been, certainly the arbitral right disappeared because this was a --

Justice William J. Brennan: What -- what date?

Mr. Charles H. Lieb: We say that the right to arbitrate disappeared on October 2nd.

Justice Potter Stewart: Why?

Mr. Charles H. Lieb: Because pursuant to a plan announced to the union in advance of the merger actually put into operation on the date of the merger and actually completed pursuant to plan within two months plus following the merger, the Interscience industrial community was physically broken up.

It was moved per plant, block, stock and barrel over into a much larger plant.

The Interscience employees were relieved from the work that they formally were doing.

There was no longer Interscience work to be done.

They were put on Wiley jobs.

They were no longer represented for collective bargaining purposes by this union because this union represented a group of 40 clericals working in an Interscience establishment and not 40 out of 400 employees doing similar work in the similar unit working in the Wiley establishment.

In other words, we say that -- that as of the date when the -- when the dissolution of the Interscience enterprise was commenced, the Interscience collective bargaining contract was no longer appropriate.

Justice William J. Brennan: (Inaudible) would commence according to a plan.

Mr. Charles H. Lieb: Yes.

Justice William J. Brennan: It has been announced before --

Mr. Charles H. Lieb: Yes.

Justice William J. Brennan: -- October 2 that it was for that fact that we're in trouble with.

Mr. Charles H. Lieb: Well, we have another -- we've been -- we've been misquoted by the union on amicus.

We never took the position at the time of the merger that the merger as such terminated the contract or prevented the obligation that Interscience had from flowing over to Wiley.

We took the position before the merger and at the time of the merger that the contract would no longer be effective because the work force of Interscience was being integrated into the Wiley work force.

Now, I should say that we never had the opportunity to present proof on this.

This record is -- is -- in thin state over this because the union moved for summary judgment.

We stated the ultimate type that the Interscience enterprise had been integrated into the Wiley enterprise.

The union didn't think that it was relevant or important.

We suggested that if the union was to proceed in Court under Section 301 at the time I thought it was proceeding under Section 4 of the Arbitration Act that we should be given as a defendant in a plenary action, pretrial, advantages of development of proof.

Justice William J. Brennan: What they're now asking, reinstatement (Inaudible)

Mr. Charles H. Lieb: Yes.

Justice William J. Brennan: And this on the ground, as I now understand you, I've had so much difficulty with Mr. Harris.

Don't make it difficult with you too.

As I understand it, what your -- your position is that Wiley -- no obligation of Wiley to go to arbitration (Inaudible) that on October 2, the bargaining unit was dead finished and therefore there was no basis upon which any obligation should be imposed on Wiley under federal law.

Mr. Charles H. Lieb: That is our position --

Justice William J. Brennan: Alright.

Mr. Charles H. Lieb: -- sir, yes.

And the facts to support that, we think are adequately stated in the record.

If you take the -- the fact that phy -- the physical consolidation according to the Union's own position took place in January and if you look at the record to see the announced plan of Wiley on and before October 2.

Justice Byron R. White: Well, Mr. Lieb, do you -- do you feel that it's absolutely essential for you to establish that Wiley never became bound that all who knew the contract?

As I understand the union's position as it once -- once or the amicus once Wiley becomes bound to the contract for any period of time.

Then it's only a matter of interpretation of the contract as to whether it was intended in any part to survive expiration whether by virtue with its own terms or by the dissolution of a -- of a bargaining unit.

And it's only a question for the arbitrator to say, if these parties intend, for example, the obligations, or vacation pay, or seniority, or pension rights to survive the expiration of the contract.

That is what I gather, they are the same.

It's only a matter of the meaning of the agreements.

Certainly, the parties could aid -- just expressly say that regardless of the termination of the contract, certain obligations are going to continue, but infinitive in perpetuity.

They could say that.

The union claims that that's what the contract means.

And that -- that the arbitrator is the one who should interpret it.

And once Wiley gets on the line, it can't get off.

Mr. Charles H. Lieb: We think it's essential to establish that -- that the Court must decide whether or not Wiley is responsible to arbitrate.

Justice Byron R. White: Well, yes, but what if it -- what if the Court decided that as a matter of the law, the merger does not automatically terminate an agreement.

And that the -- and that the acquiring company is bound by the contract if there is no dissolution of the -- of the -- the industrial community on the date of merger.

Now, what if the -- assuming the Court decided that?

Mr. Charles H. Lieb: We would think that under that rule, Your Honor, Wiley would be relieved from arbitrating with the union.

Because we take the position that the -- what -- we -- if given the opportunity to --

Justice Byron R. White: The day after a merger, if the Court decided that the merger did not automatically terminate, the day after merger, Wiley would be bound to -- under the contract.

Mr. Charles H. Lieb: Well, the fact -- the fact is there's no -- that's not in the record.

Justice Byron R. White: (Voice Overlap) -- well, is that right -- I mean, that -- I'm -- I'm close, I'm consummating that the Court did decide that.

Mr. Charles H. Lieb: This?

Yes, yes.

Justice Byron R. White: Assume that it did decide that.

Mr. Charles H. Lieb: But we would show that on the day of the merger, Interscience employees were brought over the Wiley.

If given the opportunity to present fact here, we would show that on the very date of the merger --

Justice Byron R. White: Alright, I -- I grant you that you might have quite facts with these two, but let's just assume for the moment, just assume for the moment --

Mr. Charles H. Lieb: Yes.

Justice Byron R. White: -- that no -- that -- that the industrial community did not dissolve on that day.

That as a matter of fact it didn't.

That it was two months before you moved any employee.

You left them right in that plant.

Now, just assume that for the moment, then Wiley does become bound or let's assume the Court decides that it did -- if we made that Wiley became bound on the contract.

Now, is there -- is there any other way out for you then?

Mr. Charles H. Lieb: Oh yes.

Justice Byron R. White: Out of the cons --

Mr. Charles H. Lieb: Oh yes.

We -- we make --

Justice Byron R. White: What -- what are -- what is (Voice Overlap) --

Mr. Charles H. Lieb: Well, we presented a number of other defendants.

Justice Byron R. White: What is one of them?

Mr. Charles H. Lieb: Well, in the first place, we say that -- that the union lost its right to arbitration and abandoned the arbitration.

They elected not to arbitrate.

They've elected to bargain with us.

It talked with us for four months when we said that --

Justice Byron R. White: -- the procedural arbitrability --

Mr. Charles H. Lieb: So called --

Justice Byron R. White: He refused a procedural arbitrability.

Mr. Charles H. Lieb: So called.

So called.

We --

Justice Byron R. White: And what's another way out?

Mr. Charles H. Lieb: We have -- we have two others.

Another defense that we have is that the claims, as of them is by themselves, are not arbitrable.

That they're not arbitrable because this --

Justice Byron R. White: Within the provisions of the arbitration clause.

Mr. Charles H. Lieb: Not -- not within the scope of the contract at all.

Justice Byron R. White: Yes.

Mr. Charles H. Lieb: And the third reason why we say that -- that we have a full and complete defense is that we say that in any event, the union has lost its right to arbitrate for this people.

Justice Byron R. White: But you wouldn't include in your -- in your other ways out the fact that once Wiley became bound, it cease to be bound because the contract expired or because the bargaining unit, it was dissolved in a later date.

Mr. Charles H. Lieb: I -- I would sir, except that I put that under my nonarbitrable point because it seems to me, if only for the reason that the contract says that the company shall make contributions to the union welfare plan for two years ending January 31, that any claim that the union makes that the company, whether Interscience or Wiley, should make contributions for succeeding years, obviously is not within the scope of the contract.

We think that a point is reached notwithstanding the -- the -- your decisions in the Steel Workers cases.

We think a point is reached where as Professor Cox had occasioned to say, you can have a frivolous assertion.

Our claim was distinguished from a fri --frivolous claim.

And we haven't had the time to -- to argue or discuss these questions, and the fact that I haven't argued them, doesn't mean that I don't feel very strongly about that.

We -- we think that -- I see my light is over.

My -- my light is off.

Justice Hugo L. Black: (Inaudible)

Mr. Charles H. Lieb: Yes sir.

Justice Hugo L. Black: If the merger agreement or the creature's agreement or whatever you call it, in the record?

Mr. Charles H. Lieb: It is in the record but not printed but I should like to hand it up if I may.

It -- it's Exhibit 2 (a).

Justice Hugo L. Black: What did it provide if anything about the assumption of the existing contracts?

Mr. Charles H. Lieb: It provided nothing.

I drew the agreements.

Justice Hugo L. Black: There was nothing.

Mr. Charles H. Lieb: It provided nothing about assumption of existing contracts.

It said nothing.

We relied to protect the -- the creditors of Interscience.

We relied on the Section 90 of the New York Stock Corporation law.

I'd like to say Mr. Justice Black that the assumption has been made, I think too glibly, that Section 90, if it were held to apply, would apply to this.

Section 90 as I read it, refers to rights of creditors.

That's the way the section is titled.

I don't consider that the right of a collective bargaining representative to demand arbitration is a creditor's right which even if Section 90 did apply would carry over under that section.

Justice Hugo L. Black: Let me ask you one other question.

Is there anything in the National Labor that's expressly -- which refers at all, what happened to the company owning a factory, or a person owning a factory to have the collective bargaining agreement with the unions to sell that factory to another company or another person?

Mr. Charles H. Lieb: There's nothing in the Act, sir --

Justice Hugo L. Black: Do you think its expressed or referred to?

Mr. Charles H. Lieb: No, sir.

As -- as we said on Thursday, the lower courts and the Board have held on contract board questions that the successor is never been there, unless he's an (Inaudible) under the old contract.

Thank you very much.