Under § 301(a) of the Labor Management Relations Act, petitioner
labor union sued in a state court to compel arbitration of the
claimed wrongful discharge of employees, the action being based on
a collective bargaining agreement providing for arbitration at the
union's request of disputes which the parties could not settle.
Respondent employer contended that the union had struck in
violation of a no-strike clause in that agreement, thereby
terminating the employer's obligations thereunder, and it
counterclaimed for damages for breach of the no-strike clause. The
State Supreme Court affirmed a lower court ruling that the union,
by its walkout, had waived its right to arbitrate the
grievances.
Held: The union's alleged breach of its promise in the
collective bargaining agreement not to strike did not relieve the
employer of its duty under such agreement to arbitrate, there being
no inflexible rule that the duty to arbitrate depends upon
observance of the promise not to strike.
Drake Bakeries, Inc.
v. Bakery Workers, 370 U. S. 254,
followed. Pp.
376 U. S.
248-253.
(a) A state court exercising its concurrent jurisdiction over
suits under § 301(a) applies federal substantive law. P.
376 U. S.
250.
(b) Though the employer is obliged to arbitrate the union's
grievances, it can pursue its claim for damages in the state court
for the alleged breach of the no-strike clause. Pp.
376 U. S.
252-253.
(c) The employer is not released from its duty to arbitrate by
the passage of time resulting from its refusal to do so. P.
376 U. S.
253.
254 Iowa 882,
119 N.W.2d 141,
reversed and remanded.
Page 376 U. S. 248
MR. JUSTICE HARLAN delivered the opinion of the Court.
This case, which was brought here from the Supreme Court of
Iowa, 374 U.S. 826, presents a problem concerning the relationship
between an arbitration clause and a no-strike clause in a
collective bargaining agreement.
Although this case comes to us on the pleadings, and some
disputed questions of fact are still to be resolved, we accept as
true the following facts for the purposes of our decision. The
petitioner, Local Union No. 721, United Packinghouse, Food and
Allied Workers, AFL-CIO, and the respondent, Needham Packing Co.,
had an agreement which included provisions of both kinds, set out
hereafter. On May 11, 1961, Needham discharged Anton Stamoulis, an
employee represented by the union. In response, on the same day,
about 190 other employees left work. During the next few days,
Needham advised the employees to return to work, stating that if
they did not, their employment would be regarded as terminated, and
that the discharge of Stamoulis would be treated under the
grievance procedures of the collective bargaining agreement. The
employees did not return to work.
On July 5, 1961, the union presented to Needham written
grievances on behalf of Stamoulis and the other employees,
asserting that they had been "improperly discharged" and requesting
their reinstatement with full seniority rights and pay for lost
time. By letter dated July 11, 1961, Needham refused to process the
grievances. The letter stated that the union and its members had,
by their conduct, "repudiated and terminated the labor agreement"
with the company. In addition, Needham stated that it would not
have further dealings with the union, and did not recognize the
union as majority representative of Needham employees.
This suit by the union under § 301(a) of the Labor Management
Relations Act, 29 U.S.C. § 185(a), to
Page 376 U. S. 249
compel arbitration of the two grievances followed. Needham
alleged as a defense that the union and its members had struck on
May 11, 1961, and that this breach of the no-strike clause of the
collective bargaining agreement had been and was treated by Needham
as having terminated its obligations under the agreement. In
addition, Needham filed a counterclaim, alleging that it had been
damaged in the amount of $150,000 by the union's breach of the
no-strike clause. The union denied such breach. At the close of the
pleadings, in accordance with Iowa procedure, Needham moved for a
ruling on points of law and a final order denying the union's
petition to compel arbitration. [
Footnote 1] Deciding solely on the basis of matters raised
in the pleadings as to which there was no dispute, the trial court
ruled in Needham's favor and issued an order against the union. The
union obtained an appeal. The Supreme Court of Iowa affirmed the
holding below that "the Union had waived its right to arbitrate the
grievances filed by its walkout." 254 Iowa 882, 887,
119 N.W.2d 141,
143. [
Footnote 2]
In the present posture of this case, we must answer the question
whether acts of the union relieved Needham of
Page 376 U. S. 250
its contractual obligation to arbitrate almost entirely on the
basis of the agreement itself. We think it plain that, seen from
that perspective, the judgment below must be reversed.
The two controlling provisions of the collective bargaining
agreement are written in comprehensive terms. The no-strike clause
provides:
"It is agreed that, during the period of this agreement, the
employees shall not engage in and the Union shall not call or
sanction any slow down, work stoppage or strike. . . ."
The grievance provisions include typical procedures for the
resolution of a dispute preliminary to arbitration. They then
provide:
"In the event a dispute shall arise between the Company and the
Union with reference to the proper interpretation or application of
the provisions of this contract and such dispute cannot be settled
by mutual agreement of the parties, such dispute shall be referred
to a board of arbitration upon the request of the Union."
It is evident from the above as well as other provisions of the
agreement [
Footnote 3] that the
grievance procedures were intended largely, if not wholly, for the
benefit of the union.
A state court exercising its concurrent jurisdiction over suits
under § 301(a) applies federal substantive law.
Charles Dowd
Box Co., Inc. v. Courtney, 368 U. S. 502. The
law which controls the disposition of this case is stated in
Drake Bakeries Inc. v. Local
50, American Bakery & Confectionery Workers International,
AFL-CIO,
Page 376 U. S. 251
370 U. S. 254. In
that case, the employer had filed an action for damages under §
301(a), alleging that the union had "instigated and encouraged its
members to strike or not to report for work," in violation of a
no-strike clause.
Id. at
370 U. S. 256.
The collective bargaining agreement contained a broad arbitration
clause covering
"all complaints, disputes or grievances arising between . . .
[the parties] involving questions of interpretation or application
of any clause or matter covered by this contract or any act or
conduct or relation between the parties hereto, directly or
indirectly."
Id. at
370 U. S.
257.
The employer argued that the promise not to strike was so basic
to the collective bargain, and breach of the no-strike clause so
completely inconsistent with the provision for arbitration, that
the employer's duty to arbitrate was excused by the union's breach.
This argument, which is essentially that of Needham here, was
rejected on grounds fully applicable to this case. Although the
Court relied in part on the employer's apparent intention not to
terminate the contract altogether, more central to its conclusion
was the view that there was no "inflexible rule rigidly linking
no-strike and arbitration clauses of every collective bargaining
contract in every situation."
Id. at
370 U. S. 261.
(Footnote omitted.) We said:
"[U]nder this contract, by agreeing to arbitrate all claims
without excluding the case where the union struck over an
arbitrable matter, the parties have negatived any intention to
condition the duty to arbitrate upon the absence of strikes. They
have thus cut the ground from under the argument that an alleged
strike, automatically and regardless of the circumstances, is such
a breach or repudiation of the arbitration clause by the union that
the company is excused from arbitrating, upon theories of waiver,
estoppel, or otherwise. Arbitration provisions, which themselves
have not been repudiated, are meant to
Page 376 U. S. 252
survive breaches of contract, in many contexts, even total
breach; and in determining whether one party has so repudiated his
promise to arbitrate that the other party is excused the
circumstances of the claimed repudiation are critically important.
In this case, the union denies having repudiated in any respect its
promise to arbitrate, denies that there was a strike, denies that
the employees were bound to work on January 2, and asserts that it
was the company itself which ignored the adjustment and arbitration
provisions by scheduling holiday work."
Id. at
370 U. S.
262-263. (Footnotes omitted.)
Continuance of the duty to arbitrate is, if anything, clearer
here than it was in
Drake Bakeries, where one of the
issues was whether an alleged strike was within the intended scope
of the arbitration clause. There is no question in this case that
the union's claim of wrongful discharge is one which Needham agreed
to arbitrate. [
Footnote 4]
Nothing in the agreement indicates an intention to except from
Needham's agreement to arbitrate disputes concerning the
"interpretation or application" of the agreement any dispute which
involves or follows an alleged breach of the no-strike clause. That
the no-strike clause does not itself carry such an implication is
the holding of
Drake Bakeries.
The fact that the collective bargaining agreement does not
require Needham to submit its claim to arbitration, as the employer
was required to do in
Drake Bakeries, and indeed appears
to confine the grievance procedures to grievances of the union,
does not indicate a different result. Needham's claim is the
subject of a counterclaim in the Iowa courts; nothing we have said
here precludes
Page 376 U. S. 253
it from prosecuting that claim and recovering damages. [
Footnote 5] That Needham asserts by way
of defense to the union's action to compel arbitration the same
alleged breach of the no-strike clause which is the subject of the
counterclaim does not convert the union's grievance into Needham's
different one. [
Footnote 6]
Nor do we believe that this case can be distinguished from
Drake Bakeries on the ground that that case involved only
a "one-day strike,"
id. at
370 U. S. 265.
Whether a fundamental and long- lasting change in the relationship
of the parties prior to the demand for arbitration would be a
circumstance which, alone or among others, would release an
employer from his promise to arbitrate we need not decide, since
the undeveloped record before us reveals no such circumstance.
Compare Drake Bakeries, supra, at
370 U. S. 265.
The passage of time resulting from Needham's refusal to arbitrate
cannot, of course, be a basis for releasing it from its duty to
arbitrate.
Needham's allegations by way of defense and counterclaim that
the union breached the no-strike clause, supported by such facts as
were undisputed on the pleadings, did not release Needham from its
duty to arbitrate the union's claim that employees had been
wrongfully discharged. On that basis, we reverse and remand to the
Iowa Supreme Court for further proceedings.
It is so ordered.
[
Footnote 1]
Rule 105 of the Iowa Rules of Civil Procedure, 58 I.C.A.
provides:
"The court may in its discretion, and must on application of
either party, made after issues joined and before trial, separately
hear and determine any point of law raised in any pleading which
goes to the whole or any material part of the case. It shall enter
an appropriate final order before trial of the remaining issues,
adjudicating the point so determined, which shall not be questioned
on the trial of any part of the case of which it does not dispose.
If such ruling does not dispose of the whole case, it shall be
deemed interlocutory for purposes of appeal."
[
Footnote 2]
Although Rule 105 provides that a final order entered under it
shall be "deemed interlocutory for purposes of appeal," the order
which is entered is a
"final order . . . adjudicating the point so determined, which
shall not be questioned on the trial of any part of the case of
which it does not dispose."
See supra, note 1
Accordingly, our jurisdiction was properly invoked.
[
Footnote 3]
For example, the agreement provides that grievances must be
presented within 14 days "of the occurrence giving rise to such
grievance" or within 14 days "of the time the Union has knowledge,
or should have had knowledge of such grievance. . . ."
[
Footnote 4]
In effect, the union's grievance involved the "interpretation or
application" of § 8(a) of the collective bargaining agreement,
which provided that Needham could discharge employees "for just
cause."
[
Footnote 5]
Here, as in
Atkinson v. Sinclair Refining Co.,
370 U. S. 238, we
find it unnecessary to decide what effect, if any, factual or legal
determinations of an arbitrator would have on a related action in
the courts.
See id. at
370 U. S. 245,
note 5.
[
Footnote 6]
Atkinson v. Sinclair Refining Co., 370 U.
S. 238, in which the provision for arbitration was
similarly limited to employee grievances, is of no relevance here,
since the question in that case was whether the employer's action
for breach of the no-strike clause should be submitted to
arbitration.