NOLDE BROS., INC. v. BAKERY WORKERS
Legal provision: Labor-Management Relations
Argument of Allan L. Bioff
Chief Justice Warren E. Burger: We will hear arguments next in 1198, Nolde Brothers v. Local No. 358.
Mr. Bioff, you may proceed when you are ready.
Mr. Allan L. Bioff: Mr. Chief Justice, and may it please the court.
The issue in this case is whether an employer may be required to arbitrate a dispute between the employer and a union, where the dispute, i.e., both the events which give rise to the alleged liability and the union’s claim concerning that liability, all occur after the agreement to arbitrate has ended.
The facts of the case are undisputed.
The Employer, Nolde, a manufacturer of bakery goods, maintained and operated a bakery plant in Norfolk, Virginia and had entered into a Labor Agreement in July of 1970 with the Respondent Union which had a term extending until July 21, 1973.
However, the duration clause of the Labor Agreement provided that after July 21, 1973 the Labor Agreement would remain in effect until either a new agreement was reached by the parties or either party gave written notice to the other of cancellation.
The Labor Agreement contained a severance pay provision.
That provision, in general terms, stated that employees with three or more years of continuous service with the employer would be entitled to a severance payment based upon a formula set out in the contract upon the happening of certain contingencies, one of which was the permanent closing of the plant.
The agreement also contained a grievance arbitration procedure.
In mid-May 1973, the Union gave notice to the company pursuant to Section 8(d) of the National Labor Relations Act of its intention to negotiate a new agreement, and negotiations between the company and the union then commenced and continued for a period of some three months.
No agreement was reached by the parties during this period of negotiation.
On August 20, 1973 the union sent to the company, a written notice of seven-day cancellation of the contract pursuant to the Duration Clause of the agreement.
That notice was sent on August 20, 1973 which meant that the Labor Agreement terminated by reason of the Union’s notice on August 27, 1973.
The negotiators for the parties met on August 31, 1973, at which time the union rejected the company’s final proposal for a new contract.
At that meeting, the union advised the company that unless the company accepted the union’s proposals, the union would go out on strike.
After considering the union’s proposals, considering its financial position, the employer concluded that it could not survive at its Norfolk, Virginia plant in the face of a strike and it accordingly notified the union that effective that night, August 31, 1973, the employer was permanently closing its Norfolk, Virginia plant.
And in fact, on that date, the employer did close permanently its Norfolk, Virginia plant and on that date it terminated the employees represented by the union.
Subsequent to the plant closing, subsequent to the termination of the employees, the union made a demand upon the Company for the payment of severance pay.
The employer declined to pay severance pay.
The union then made a demand upon the employer to arbitrate the issue as to whether the employer was obligated to pay the severance pay.
The employer declined to arbitrate.
In both instances, the employer’s position was that the obligation to pay severance pay and the duty to arbitrate, both were extinguished or expired when the contract ended.
Unknown Speaker: Suppose, hypothetically, that instead of that sequence, the parties had rocked along for another year or two without a contract, as I am sure you know sometimes happens.
Mr. Allan L. Bioff: Yes, sir.
Unknown Speaker: And then after a year, a year-and-a-half, the employer closed the plant.
Would you say that the right to the severance pay which you now claim was vested under the written contract would be enforceable a year–and-a-half, two years later?
Mr. Allan L. Bioff: Your Honor, are you assuming in your question that the contract had been terminated, as it was?
Our position is...
Unknown Speaker: Contract terminated but employment continued and the factory continued operating.
Mr. Allan L. Bioff: But that was closed a year-and-a-half or so later?
On those facts, I think we would have the same fact situation as we have in this case.
Unknown Speaker: Five years later then, it still would have to be the same, wouldn’t it?
Mr. Allan L. Bioff: Yes, our position is simply this.
That under the contract the employees were not entitled to severance pay simply because there was no contract after August 27, 1973.
That is not to say, and I think that this point is at the very heart of this litigation, that is not to say that the employees were automatically divested of a right to severance pay when the contract terminated, because under the National Labor Relations Act, when a contract ends, the terms and conditions of employment that are set forth in that contract continue in effect until such time as either the employer and the union agree to new terms and conditions of employment or the employer bargains away the existing terms and conditions of employment by bargaining with the union to an impasse.
In this case, the record is unclear as to exactly what happened on August 31, 1973, i.e., whether the union made any demand upon the employer to negotiate with the employer over the ending of severance benefits.
Thus, it is unclear whether there may have been a waiver by the union of its right to bargain over the elimination of the severance benefits.
But assuming that there was no waiver of that right, and assuming that the employer simply unilaterally ended the severance benefits, that would be arguably a violation of Section 885 of the National Labor Relations Act, one of the remedies for which might have been the payment of the severance benefits.
The point is here, the union never filed an unfair labor practice charge.
It never filed a complaint with the Labor Board saying the employer had unilaterally terminated the severance benefits.
I am not sure, Mr. Chief Justice, that answered your question but I think –
Unknown Speaker: Well, I take your answer to be that no matter how much time had elapsed, the men kept on working, the factory is open.
But when, as and if the factory was closed, severance pay under the original contract would be enforceable.
Mr. Allan L. Bioff: No, Sir.
Assuming the contract had been terminated, severance pay would not be enforceable under the contract because the contract no longer existed.
Unknown Speaker: Then I did misunderstand you.
I thought you said at first it would be the same whether it was three days, three weeks or three years.
Mr. Allan L. Bioff: I am saying that, what I am saying is whether it is three days, three weeks or three years after the termination of the contract, there is no right to severance pay under the contract because the contract no longer exists.
Consequently, there is no right to arbitrate the question of whether or not severance pay is owing, again, because there is no agreement to arbitrate and the duty, as this Court has frequently said, to arbitrate depends upon the existence of an agreement to arbitrate.
Justice Thurgood Marshall: Two questions.
Mr. Allan L. Bioff: Yes Sir.
Justice Thurgood Marshall: Do you have suppose the matter was in arbitration for about a week and the plant closed down and the contract was gone?
Would that arbitration continue?
Mr. Allan L. Bioff: Are you referring to an arbitration over severance pay or some other issue?
I would think the arbitration would continue because presumably the arbitration provision under that hypothetical case had been invoked prior to the terminal date of the agreement.
Justice Thurgood Marshall: What if there was this man who claimed that he was not paid for the last week of work?
He could maintain that under the contract, of course.
Mr. Allan L. Bioff: You are assuming that the man works Monday through Friday, the contract ends on Saturday.
Can he then arbitrate the issue?
I think the answer to that is probably yes, that he can.
But I think –
Justice Thurgood Marshall: It is under the contract.
Mr. Allan L. Bioff: Yes, sir.
I think the difference between that case.
Justice Thurgood Marshall: I think you better say that he can get it from work rather than out of the contract.
Mr. Allan L. Bioff: Well, I think there is a distinction between the case you put and the case that is at bar here and I think the difference is simply this.
When the individual works Monday through Friday, the contract ends, the employer refuses to pay for that last week’s work.
I think that issue might very well be arbitrable because all of the events giving rise to the grievance that was filed occurred while the contract existed and indeed the employer’s liability for the payment of those wages came into existence during the term of the contract.
In our case, the difference is that there was no liability created for severance pay until after the contract terminated.
Justice Thurgood Marshall: If you had severed the man on Friday, he would have had arbitrable, wouldn’t he?
Mr. Allan L. Bioff: Let us assume the contract ends on Saturday.
We discharged the man on Friday.
The grievance is filed on Monday.
It would be our position that that grievance is arbitrable because the event giving rise to a claimed liability occurred while the contract existed.
If the man was discharged on Monday and the contract expired on Saturday, it would be our position that that discharge grievance would not be arbitrable.
Let me take this case, now, let us assume that there is a provision in the contract that says, “An employee with one year or more of service may not be discharged without a prior warning notice”.
And let us assume that the contract expires on Saturday and the employer discharges the employee on Monday.
But the employee has not had a prior warning notice.
It would be our position on those facts that, that discharge is not subject to the Grievance Arbitration Procedure simply because at the time, the discharge occurred, the Grievance Arbitration Procedure no longer existed.
However, that employee might very well have a claim before the National Labor Relations Board, that the employer had unilaterally changed the terms and conditions of employment after the contract ended without bargaining with the union because the pre-existing term and condition of employment was that employees would not be discharged, i.e. employees with more than a year of service, would not be discharged without a prior warning notice.
After the contract ends, the employer discharges the employee without a prior warning notice, hence, there is a change, a unilateral change in terms and conditions of employment and the employee has a case before the Labor Board under 885.
Unknown Speaker: Counsel, you emphasize the critical fact being that the liability totally matured prior to the expiration of the agreement, gave rise to the duty to arbitrate, as I understand you.
You say all the events supporting the claim, supporting the liability happened before the contract expired.
Is it, am I mistaken?
Mr. Allan L. Bioff: That is the test.
Unknown Speaker: I am not stating it awkward.
Mr. Allan L. Bioff: That is not our case.
Our case is everything happened after the contract expired.
Unknown Speaker: Oh, I understand that, but you would concede that you had a duty to arbitrate if the events occurred before the contract.
Well supposing you have a vacation pay case and it is generally considered to be a vested interest, a vacation pay but the Christmas does not come until two weeks after termination of the contract.
Would the claim for the pro rata share of vacation pay be arbitrable or not?
I am stating it awkwardly but assume that the contract expires after ten months of vacation pay vested but before he actually gets a vacation.
Could he arbitrate that?
Mr. Allan L. Bioff: If I understand your hypothetical correctly, our answer to that would be no.
Unknown Speaker: That is what I thought you would say.
Mr. Allan L. Bioff: Yes and I think the reason that it would not be is because simply the agreement to arbitrate had ended prior to the time that the liability for pro rata vacation came into existence.
Now again, --
Unknown Speaker: Supposing a man was fired during the middle of the pay period.
Normally you pay by the month or the week -- the contract expires in the middle of the pay period, would there be duty to arbitrate there?
Mr. Allan L. Bioff: As to the –
Unknown Speaker: Say ‘no’ again, I think.
Mr. Allan L. Bioff: As to the hours that he worked prior to the terminal date of the contract, we would say that that gave rise to an arbitrable issue because the employer’s liability was created prior to the expiration of the --
Unknown Speaker: If the right to severance pay is a vested right, your liability was created at least to the extent, to a certain extent was created –
Mr. Allan L. Bioff: Well, I think that depends, your Honor, on what you mean by a vested right.
Unknown Speaker: You can assume it is a vested right here, what duty do you have to these people, Would you have to pay them then?
Mr. Allan L. Bioff: Assuming it is a vested right, if by vested right you mean –
Unknown Speaker: You mean that they have a right to the accrued termination pay that they have earned even though a succeeding contract may not provide for it.
Mr. Allan L. Bioff: They have a right to it so long as the employer and the union have not bargained it away during the hiatus between contracts.
Therein lies the whole point in this case.
Unknown Speaker: Let me put the case a little differently.
Assume the contract said in words, "You will earn 'x' dollars of severance pay for so many months that you worked, and in no circumstances shall this be bargained away, taken away or any other.
You get it when you leave the employer for any reason whatsoever and then you did not pay him. Would they have aright to -- clear-contract right to the money?
But then you disputed over the amount or something like that.
Would that be arbitrable?
Mr. Allan L. Bioff: No, and I do not think it is a contract right to the money either, because there is no contract.
The right to the money stems from the fact that the severance pay obligation becomes a term and condition of employment after the agreement ends that the employer may not unilaterally change.
It does not stem from a contract.
The terminology “accrued right” and “vested right” as far as we are concerned is simply a label.
The question is what do you mean by that?
If you mean by an accrued right that the employer and the union may not bargain to eliminate it, then we do not agree there is such a thing as an accrued right because under the National Labor Relations Act, the employer and the union can bargain to eliminate any right that exists under a labor contract.
Let us take the severance pay case.
Let us take our case, and let us assume that instead of the employer simply notifying the union on August 31, 1973 that it was going to close the plant and it was not going to pay severance pay, assume instead the employer had come to the union and said, "We are contemplating, closing the plant.
We are in poor financial condition, we do not want to pay severance pay. We want to negotiate with you about the severance pay" and they do negotiate.
Now, one of two things is going to happen.
The union agrees to the elimination of the severance pay and certainly the law does not say the employer and the union cannot agree to the elimination of it.
And if they do eliminate it and the Employer then closes the plant, obviously no severance pay is due.
But let us assume..
Unknown Speaker: I am not so sure I accept your proposition, that they -- could the union in behalf of the employees give the company some money?
Could they just say, well, every employee will give you a $100 at the end of this term in order to support this failing company?
Mr. Allan L. Bioff: Could the Union agree to do that on behalf of the employees, assuming that the employees authorize the union to do it?
Unknown Speaker: But, just under the general right to bargain -- as exclusive bargaining agent, would they have the right to do that?
Mr. Allan L. Bioff: On the assumption that the union is not violating its duty of fair representation, yes.
I am assuming that the union is authorized to negotiate on behalf of its membership.
Certainly, Your Honor, let us take our severance pay case.
There is a severance pay provision in the contract that expired August 27, 1973.
Let us assume that instead of what actually occurred here, the plant remained in operation, the parties bargained for a new contract and the employer said in those negotiations, "Look, we want to eliminate the severance pay provision from the next contract."
And let us further assume that the union agreed to that elimination and they entered into a contract without a severance pay provision.
And the employer then closed the plant under the succeeding contract.
Surely, no severance pay is due and owing under those facts.
Unknown Speaker: I am not sure, I agree.
Mr. Allan L. Bioff: That would be our position, at least.
It would also be our position that, even assuming the union did not agree to the elimination of severance pay, the employer nevertheless could bargain to an impasse with the union for the elimination of the severance pay and then eliminate it.
And the union recourse then would be to strike.
The fundamental thing that is at the very core of this lawsuit, and it is a very important issue, is that the Fourth Circuit has confused two very distinct national labor policies.
The first National Labor Policy is that when you have an existing labor agreement, the parties are encouraged to resolve their controversies and their disputes by peaceful means pursuant to a Grievance Arbitration Procedure.
Indeed, that is spelled out in the Labor Management Relations Act in Section 203(d).
Incidentally, the language of Section 203(d) is very interesting because it says, "Final adjustment by a method agreed upon by the parties is hereby declared to be the desirable method for settlement of grievances, grievance disputes arising over the application or interpretation of an existing collective bargaining agreement.”
Now that is one very important national labor policy.
But there is an equally important National Labor Policy that comes into play when a labor contract expires and during the hiatus between labor contacts.
And that important labor policy is that the parties are free to bargain collectively and to utilize their respective economic strengths to obtain what they desire in those negotiations.
Unknown Speaker: The union could only strike here because the contract had expired?
Mr. Allan L. Bioff: That is correct, Sir.
Unknown Speaker: Because there was a promise not to strike in return for an agreement to arbitrate?
Mr. Allan L. Bioff: That is right, sir.
During the term of the contract, the union could not have struck.
The Union gave notice to the employer to terminate the agreement.
There was only one reason that the union gave that notice, and that was to free them to strike.
And so what the Fourth Circuit is really doing here is the Fourth Circuit is saying, "the employer has a duty to arbitrate after the contract ends even though the union has the right to strike during that period" and that is my very point.
That is why the two national labor policies which are very distinct -- one that exists while the contract is in force, the other that exists during the hiatus between contracts is being intermingled or confused by the decision of the Fourth Circuit in this case.
Unknown Speaker: What rates of pay and working conditions are applied during the period from August 27th to August 31st?
Mr. Allan L. Bioff: Those terms and conditions that existed under the agreement.
Unknown Speaker: Why?
Mr. Allan L. Bioff: Why, Sir?
Because that is what the national –
Unknown Speaker: There was no agreement covering the -- according to your submission, the rates of pay or the working conditions during that period after the agreement had been abrogated, terminated.
Mr. Allan L. Bioff: That is correct, Your Honor, but under the National Labor Relations Act, as interpreted by the National Labor Relations Board, when a labor agreement terminates, the employer may not unilaterally change the terms and conditions of employment that existed under the expired labor contract until either 1) It negotiates with the union and the union agrees to some change, 2) It negotiates with the Union and they reach a bona fide impasse over an issue, at which point the Employer may then unilaterally change that condition.
Unknown Speaker: Well, then why doesn’t that principle apply here?
Mr. Allan L. Bioff: It does.
Unknown Speaker: I mean, apply here to effect the severance pay and the arbitration thereof.
Mr. Allan L. Bioff: Well, the point is, the arbitration clause, the Labor Board has said, and we cite the Hilton Davis case in our brief, the arbitration clause is not a term and condition of employment.
The severance pay is.
So the Union’s remedy here was the Labor Board, not arbitration, and that is wherein the Fourth Circuit has committed a very serious error.
Unknown Speaker: Are you conceding that it was an unfair labor practice not to pay severance then?
Mr. Allan L. Bioff: No, I am not, Your Honor, I am not conceding that.
Unknown Speaker: It seems to me that is exactly what you said.
Mr. Allan L. Bioff: Well, perhaps I have overstated my position.
Unknown Speaker: Maybe you better explain it.
Mr. Allan L. Bioff: I would say, Your Honor, that the record is not clear, there could conceivably have been a waiver on the part of the union of any right that it had to bargain over the issue of the elimination of the severance pay.
Conceivably, such an argument could be made.
Absent that kind of an argument, I would say that it is highly likely that an unfair labor practice was committed by the elimination of a severance pay.
Unknown Speaker: Then what is the point of all this litigation? Surely, you will have to pay it sooner or later.
Mr. Allan L. Bioff: Because the union went to the wrong forum.
Because the union, instead of going to the Labor Board, went to the United States –
Unknown Speaker: Couldn’t you avoid all of this for us by simply writing them a check?
How much money is involved in this case, anyway?
Mr. Allan L. Bioff: I am really not sure, I think around $15,000.
But the point is, Your Honor, when the union went to the Federal District Court, and then when the Union went to the Fourth Circuit, it created some law that is extremely detrimental to the principles of Labor Law that those of us that practice in the field rely on, and so this case involves not money, but principle.
A very important one, I might add.
The other point that I would like to make before closing about the Fourth Circuit’s decision is that obviously it rewrites the contract, the parties’ contract.
The Labor Agreement and the Duration Clause says that after July 21, 1973, that either party, upon seven days written notice could terminate the agreement and I think it said could terminate this agreement.
Now, this agreement means every provision in the agreement, not some of them, but all of them.
Unknown Speaker: Let us assume that the contract had said expressly in the Arbitration clause, and this Arbitration Clause shall apply to the settlement of any rights accrued prior to the expiration of this contract.
And it is perfectly clear that they intended to arbitrate any dispute over an accrued right, even though the dispute arose after the termination of the contract.
Mr. Allan L. Bioff: I would have no problem with that.
Unknown Speaker: You have no problem now.
Is it not possible to read the Court of Appeals opinion as just reading the contract that way?
Mr. Allan L. Bioff: Yes, that is the way they read it.
Unknown Speaker: So it is an interpretation, why should we disagree with their interpretation of a collective bargaining contract?
That is not a great issue of law, is it?
Mr. Allan L. Bioff: Yes, it is a very great issue of law because they did not just –
Unknown Speaker: How they construed some words, is that it?
Mr. Allan L. Bioff: It was not a matter, Your Honor, of simply construing or interpreting, it was a matter of rewriting.
Unknown Speaker: No, it is not possible to read their opinion that way.
You are saying that they concluded there is a duty to arbitrate on policy grounds, or some other reason rather than the terms of the contract.
Mr. Allan L. Bioff: That would be my conclusion and that is the way I would read the decision because you cannot read this contract and conclude that the Arbitration Agreement did not end on August 27, 1973.
Unknown Speaker: Well, there are some words in the Court of Appeals opinion that indicates that as they understood the contract, it was just a promise to arbitrate even after the contract was over, about a right that was arguably vested, as we might call it, before the contract was over.
And the issue was whether it was vested or not.
Mr. Allan L. Bioff: Yes, well, I think, the way I read the Fourth Circuit’s opinion, and I suppose it can be read different ways by different people, but the way I read it, it says that the Court agrees that the agreement to arbitrate ended when the contract terminated but the Court’s rationale is that there are certain rights under a Labor Agreement, which they call accrued rights, which flow from the contract and hence, even though the agreement arbitrate is ended, those rights are nevertheless subject to arbitration because they flow from the contract.
I do not read the Court’s opinion as saying that they...
Unknown Speaker: They say that this Court did the same thing in Wiley and in the Piano case.
Mr. Allan L. Bioff: Well, the Piano -- let us take the Piano case.
Unknown Speaker: It is a tough case for you.
Mr. Allan L. Bioff: Wiley is tougher.
I do not have too much trouble with the Piano case because in the Piano case, the plant closed, the employees were terminated, the demand to rehire them at the new plant in French Lick, Indiana was made and the refusal by the employer to agree to the rehiring was all of those facts occurred before the contract ended.
The only thing that occurred afterward was the fact that they did not rehire people at French Lick.
In other words, Your Honor, the Piano case would be analogous to our case if –
Unknown Speaker: I know but the dispute arose at a time when on the face of it, the contract had expired, including the agreement to arbitrate.
Mr. Allan L. Bioff: It depends on, I think —
Unknown Speaker: Is not that right.
Mr. Allan L. Bioff: Well, I would not put it that way because I would say the dispute arose in that case before the contract ended.
Unknown Speaker: At the time of the refusal to hire —
Mr. Allan L. Bioff: The contract had ended.
Unknown Speaker: The contract had ended and it was at that time that arbitration was demanded.
Mr. Allan L. Bioff: That is correct, sir.
Unknown Speaker: At that time, on the face of it, there was no duty to arbitrate because the contract had expired.
Mr. Allan L. Bioff: If you read Piano Workers that way —
Unknown Speaker: It is a tough case.
Mr. Allan L. Bioff: It is a tough case for us, that is correct.
I think our case would be analogous to Piano Workers if the facts in our case were, that prior to August 27, 1973, i.e., prior to the ending date of the contract, the company had closed the plant.
The company had terminated the employees, the union had made a demand for severance pay.
The contract then ends, the company then refuses to pay the severance pay.
Unknown Speaker: It just compares with Wiley.
Mr. Allan L. Bioff: Well your Honor, Wiley of course, can be distinguished in some ways from our situation again if --
Unknown Speaker: (Inaudible)
Mr. Allan L. Bioff: No, in Wiley, Your Honor, the operative facts, the events over which the dispute arose did occur before the contract ended.
Wiley and Interscience merged before the agreement ended, some four months before it ended.
Wiley refused to honor any of the provisions of the Interscience contract before the contract ended.
The union filed grievances over all of the provisions of the contract before the contract ended.
Wiley refused to process those grievances before the contract ended, and the suit to compel arbitration under Section 301 occurred before the contract ended.
So in that sense, the case is quite different than ours, where the case gives us trouble as the Court’s language about accrued rights, the union relies on very strongly here.
I believe, Your Honor, my time is up.
Chief Justice Warren E. Burger: Yes, it is. Mr. Rosenberg?
We would like to finish this case tonight and get back to wherever it is you are going.
Argument of Ronald Rosenberg
Mr. Ronald Rosenberg: I live in Washington, Your Honor.
Chief Justice Warren E. Burger: Well, then it is your friend’s problem, not yours.
Mr. Ronald Rosenberg: May it please the Court.
I think that the issues here are clearly drawn by the questions that have come from the Court.
Essentially what we have is the proposition advanced by the petitioner in this case, that it is extremely detrimental to the National Labor Policy to have contractual rights vindicated in the contractual forum, that in some way, using the arbitral forum that this contract provided violates the National Labor Policy.
That argument, of course, is absurd.
It does not give full credit to this contract between the parties.
It does not give full credit to the presumption of arbitrability that this Court has many times declared.
It pays no attention whatsoever to the repeated decisions of this Court, most particularly, the Wiley and Piano Workers case, Your Honor, and Wiley is indeed directly on point.
Unknown Speaker: Do you agree with the language in Wiley as applied to this case that the question of arbitrability is one for the Court to decide?
Mr. Ronald Rosenberg: Certainly, Your Honor.
Just for the moment, if I may, the Fourth Circuit rather, did discuss the question of the arbitrator’s own duty upon remand.
That issue is not before this Court.
The dissenter in the Fourth Circuit indicated that there was a procedural arbitrability question.
That question is not presented in the Cert Petition or argued here.
The question here is exclusively arbitrability qua non.
I think that Wiley and Piano Workers are directly in point.
The one part of Wiley that is never discussed either in this argument or in the briefs by the petitioner is that element of Wiley that specifically refers to the question about the accrual of rights for the realization thereafter.
In Wiley, the lawsuit was essentially a declaratory judgment brought --
Unknown Speaker: Do you say that any time, at least arguably, a right has accrued under a labor contract, the Arbitration Clause will survive the termination of the contract unless there is some specific provision against it?
Mr. Ronald Rosenberg: Yes, Your Honor.
Unknown Speaker: You think that is Wiley?
Mr. Ronald Rosenberg: I think that is Wiley, I think that is the Steelworkers trilogy, I think that is Piano Workers.
Unknown Speaker: I do not know about the Steelworkers.
What about the rule that in order to force an employer or a union to arbitrate, there has to be a promise to arbitrate?
Mr. Ronald Rosenberg: Here there is unquestionably a promise to arbitrate.
Unknown Speaker: I know, but you have to find that the promise was intended to apply after the termination of the contract in which the promise is included.
Mr. Ronald Rosenberg: There is no indication whatsoever that it was not intended to apply to all contractual disputes.
Unknown Speaker: That is not my point, my point is where do you get the notion that a month after a contract has expired, that a right that is accrued prior to the termination of the contract has to be arbitrated?
Mr. Ronald Rosenberg: From the very language of the Arbitration Clause and from the presumption of arbitrability.
Unknown Speaker: I know, but the contract has expired.
Those words are now gone.
Mr. Ronald Rosenberg: The contract has not expired in totality, if rights survive under that contract.
Unknown Speaker: If -- the question is, is there a right to arbitrate?
That is the question.
Mr. Ronald Rosenberg: The question rather, Your Honor, is whether there was a right to severance pay.
Unknown Speaker: Oh no, well, you can do that in 301 suit.
Mr. Ronald Rosenberg: If there is a right to severance pay, a vested right to severance pay, then the proper forum for the resolution of such a dispute is arbitration and that the Court.
Unknown Speaker: I understand that is your position but in order to sustain it, you have got to show that there was a promise to arbitrate.
Mr. Ronald Rosenberg: There was unquestionably, a promise to arbitrate in the broadest marginal (ph) language.
My opponent just characterized its agreement to arbitrate as admittedly broad.
It contains no exclusion.
Unknown Speaker: But the promise has expired.
Mr. Ronald Rosenberg: The promise has expired no more than the right to vested severance pay or vested earned wages.
The hypotheticals that were presented to my opponent during his argument made clear that there are obviously rights which over accrued or earned right nature which survived the normal expiration of the agreement.
Unknown Speaker: I agree with that.
I could agree wholly with that without also agreeing that any disputes about those rights have to be arbitrated.
Mr. Ronald Rosenberg: But if you look to the Arbitration Clause, this Arbitration Clause does not remove any contractual dispute from arbitration.
If there is to be a dispute about that substance of right, it is must be determined by an arbitrator, not by a Court.
Otherwise, we would have a ludicrous situation in which there would forum shopping as between courts and arbitrators depending upon the fertility of the date of termination.
We assert rights that are based upon this contract.
Unknown Speaker: Well, I suppose you would concede that the Arbitration Clause, and the Arbitration Clause said that this promise to arbitrate shall not apply after the termination of the contract.
Did you, or you would not be making this argument.
Mr. Ronald Rosenberg: Certainly, Your Honor.
Unknown Speaker: Your client is hardly in a position to raise much question about fortuity since it was the one that gave notice of termination.
Mr. Ronald Rosenberg: But if that would be in a hypothetical situation, Your Honor, if it had occurred some other way, the question still is as to whether or not this Arbitration Clause is in any way limited, just as my opponent showed that it could have been eliminated.
Given the presumption of arbitrability as announced by this Court in the Steelworkers trilogy, there must be arbitration unless it can be said, and this is the Court’s language, “With positive assurance that there is no interpretation possible under which there is to be no arbitration.”
Unknown Speaker: That was not in the context of an expired contract.
That was in the context of what issues under the currently administered contract were arbitrable.
Mr. Ronald Rosenberg: Well, Your Honor, there is, of course the question in Wiley and then in Piano Workers as Justice White pointed out.
In Wiley, the rights to arbitrated were rights subsequent to the expiration of the agreement.
Justice Harlan, for a unanimous court in Wiley, very specifically dealt with the rights occurring, I believe it was after January 1, 1962, which was the expiration date of the contract.
Unknown Speaker: Counsel, were you bound to arbitrate, suppose when you made the demand for severance pay the employer said, let us arbitrate.
Would you have been bound?
Mr. Ronald Rosenberg: Yes.
Unknown Speaker: After the termination of the contract?
Mr. Ronald Rosenberg: Yes.
Unknown Speaker: And therefore, your strike was in breach of the agreement?
Mr. Ronald Rosenberg: There was no strike here, Your Honor, because the plant was closed prior to any strike.
But such a strike —
Unknown Speaker: You gave notice, wasn’t it?
You gave notice that you were going to strike.
Mr. Ronald Rosenberg: We gave notice, but I think the facts might be –
Unknown Speaker: Well now, just assume that you had struck.
Let us assume that the moment you gave notice you were going to strike, you struck.
Mr. Ronald Rosenberg: We struck at a time when we had no notion that the plant was to be closed.
The strike would have occurred in such a circumstance that would not have anything to do with severance pay.
Unknown Speaker: The strike during the termination of the contract would have been forbidden by the contract.
Mr. Ronald Rosenberg: A strike for severance pay would have been forbidden by the contract.
Here, notice was –
Unknown Speaker: You had a ‘No Strike’ clause in the contract and it was expressly in return for a promise to arbitrate.
Mr. Ronald Rosenberg: The ‘No Strike’ clause was in return for a promise to arbitrate contractual issues.
What we are dealing with here is a contractual claim.
The severance pay is a contractual claim.
Everything stems from the fact that our claim for severance pay sounds in contract, is governed by the contract and this Court’s decision made clear that whether there is such a claim, then necessarily there must be arbitration unless, as Your Honors pointed out, there is an expressed exclusion.
Unknown Speaker: If you were bound to arbitrate, and the Arbitration Clause was still in existence, you had no business giving notice to strike.
Mr. Ronald Rosenberg: We gave that notice prior to the time that the employer indicated any intention of the plant closing.
The issue of severance pay was not before anyone because so far as we understood that plant was to remain open forever.
Unknown Speaker: Was there a contract when you gave the notice to strike?
Mr. Ronald Rosenberg: We had given notice that the contract was to be out of effect following the time we would be, pardon me, part of the time that we intended to strike.
We never struck.
We gave notice in order to strike for new conditions.
We at no point ever indicated an intention or desire to strike for old contractual conditions.
We were not even aware that we had a contractual problem.
We did not know that there was a severance pay question.
Unknown Speaker: You did not give notice of any intent to strike over an arbitrable issue, did you?
Mr. Ronald Rosenberg: Of course not, because we knew of no arbitrable issue.
We were bargaining for the prospect of conditions.
The only time that we dealt with retroactive conditions was after the employer suddenly advised us that he was closing the plant and sometime subsequent to that, denied us the right to severance pay.
He in fact paid vacation pay.
Some of the questions by your Honor and by Justice Marshall dealt with the question of vacation pay and it is in this Court that the petitioner is now saying it had no vacation pay obligation but yet it went right ahead and paid them.
And vacation pay is indistinguishable from severance pay, and certainly as regards the arbitrability of a claim for severance pay, a claim that is based upon the contract itself.
Unknown Speaker: Though I understand that the time you gave the notice of intention to strike, there was no contractual arbitrable issue to which you were promised not to strike, apply.
Mr. Ronald Rosenberg: Of course not.
Unknown Speaker: That did not arise until the severance pay issue arose and that could not arise until the plant was shut down?
Mr. Ronald Rosenberg: We said we were going to strike in order to get a higher wage.
The Company said, well, we cannot afford that, sorry, we are going to close that plant.
Then we said, a week later, well you can close the plant now, pay us the money you owe us under our contract.
So that the timing makes absolutely clear that any threatened strike had nothing –
Unknown Speaker: But I want to be clear.
Your answer to my Brother White is, at the time you gave the notice you were going to strike, there existed no arbitrable issue?
No contractual issue for arbitration to which the promise not to strike applied?
Mr. Ronald Rosenberg: That is precisely right, Your Honor.
Unknown Speaker: Am I correct in understanding that the contractual issue with respect to severance pay is simply whether or not the obligation is a vested right or not?
Mr. Ronald Rosenberg: Yes, Your Honor, however phrased, whether vested, earned –
Unknown Speaker: or accrued, whatever it is.
Mr. Ronald Rosenberg: Whatever the phrasing, I think the Fourth Circuit stated it very well.
The nature of the right to severance pay is something that is determined by the parties, by their intention.
The question of who is to determine the parties’ intention has been answered repeatedly, and whether it is, as here, a broad Arbitration Clause, that question as to the intent of the parties is to be answered by the arbitrator.
If not, we would have a situation in which the very series of hypotheticals that were presented would all be matters for the already overburdened Federal Courts. I think, Your Honor asked a question about wages.
It is very easy to say, yes, we will pay the wages that were due in the final week.
But what if there is a dispute over those wages?
In that circumstance, would there not then be a federal suit for $25, a difference between a claim of wages for $75 and $100?
I think it is clear that, beyond any question, that that matter is one for arbitration rather than the Courts and that is what we are discussing here, because our claim is contractual in nature.
If not resolved by the arbitrator, it must be resolved by the Courts.
And if to be resolved by the Courts, it would inundate an already overburdened federal judiciary.
Unknown Speaker: What do you say about his argument that all he you had to do was go to the Labor Board and file an Unfair Labor Practice Charge and you would have been paid?
Mr. Ronald Rosenberg: We do not go to the Labor Board to enforce contract claims, Your Honor.
We have a contract.
We wanted him to live up to his contract.
The Labor Board is not the place to enforce contractual claims.
Section 301 is the place to enforce contractual claims.
Unknown Speaker: But, he says that by refusing to pay you, they changed the terms and conditions of employment unilaterally and thereby committed an unfair labor practice and all you had to do was file a charge and, as I understand them, they would desperately search for a defense and then pay you.
Mr. Ronald Rosenberg: I doubt that they would have said that if we had filed an unfair labor practice charge.
Whether or not they would have said that there was no impasse, it is something else again.
It is very easy in this Court to say that they had not bargained to impasse on the issue.
They might have had an entirely different position before the National Labor Relations Board.
We are perfectly prepared to submit our contract claim to the contractually provided method for adjustment.
Why should we go to the Labor Board to deal with an issue of entirely different dimension?
That would be ludicrous.
We have a contract.
We want it enforced, and we want it enforced in the way that the contract itself provides.
We have a contract with an admittedly broad, to use the company’s phrase, Arbitration Clause, a clause that the Court of Appeals referred to as all-encompassing.
So unlike the hypothetical presented by Justice White, we do not have an Arbitration Clause that is in any way limited.
We rather have one that is as broad as can be and given that clause, and given this Court’s decisions saying that there can be no denial of arbitration in such a circumstance, unless one can say that no interpretation is available, it is clear that the Fourth Circuit’s interpretation of this Arbitration Clause and this contract as permitting arbitration, is one that must be given credence.
Unknown Speaker: How long does this Arbitration Clause survive the termination of the contract?
Mr. Ronald Rosenberg: For so long as contract claims can be made, in the same sense that a suit for severance pay in a Court of law can be made some time later, or in the same way that a suit for pension might come at some time substantially subsequent to the normal expiration of the contract.
If such a claim regarding pension came up, it would obviously be a contract claim to be contractually resolved and similarly, a claim for severance pay based upon a contract must be contractually resolved even though it might come up some time, significantly subsequent in time.
We do not have that issue here.
The demand for arbitration followed immediately upon the notification that the plant was closed and the denial of the severance pay.
I think I have used all but my opponent’s rebuttal.
Chief Justice Warren E. Burger: No, your opponent has no time left.
Mr. Ronald Rosenberg: Oh, he has no time, and that being so we will pass any further time, Your Honor, in the case now, unless there are any further questions.
Chief Justice Warren E. Burger: I hear none.
Thank you gentlemen.
The case is submitted.