BLACK et al. v. CUTTER LABORATORIES.*
On October 6, 1949, Doris Walker, a member and president of the respondent labor union, was discharged by the Cutter Laboratories, her employer. The union contended that Doris had been discharged because of her lawful union activities, and that such discharge was in violation of a collective bargaining agreement existing between the union and the employer. The employer contended that it had discharged Doris because she had made false statements in her application for employment, and because she was a dedicated communist, and urged that these were just causes for dismissal within the meaning of the collective bargaining agreement. Pursuant to the terms of that agreement the dispute was submitted by both parties to a board of three arbitrators, one chosen by each of the disputants, and the third being a neutral arbitrator. The arbitrators, after taking considerable evidence, found that Doris had not been discharged for just cause within the agreement, but had, in fact, been discharged because of her union activities, that this was in violation of the collective bargaining agreement, and ordered her reinstated and paid limited back pay as provided in the agreement. The union duly moved the Superior Court to confirm this award. This motion was resisted by the employer on the basic grounds that the arbitrators had erroneously and prejudicially denied to it a fair hearing in that they had refused to compel Doris to answer questions as to whether she was a communist, and about her claimed communist activities. It was also affirmatively urged that the award was illegal and violative of public policy in that it ordered the reinstatement into a defense plant of a dedicated communist. A motion to vacate the award on these grounds was made by the employer. The trial court, in a memorandum opinion, pointed out that no prejudice was suffered by appellant by the refusal of the arbitrators to compel Doris to answer the disputed questions, because other evidence was introduced on these matters and because the arbitrators found that Doris was a member of the communist party up to the date of her discharge. The excluded evidence was, therefore, held to be cumulative and its exclusion nonprejudicial. Thereupon, the trial court denied the motion to vacate and ordered the award confirmed. The employer, then, offered objections to the proposed findings, offered to produce evidence on its affirmative defense of illegality, and demanded a hearing on the issue. The amendments were rejected, the hearing denied, the award confirmed, and judgment ordered entered pursuant to the award. Cutter Laboratories appeals.
The collective bargaining agreement between the parties, effective at all times here relevant, provided for submission of union grievances to arbitration, provided how the arbitrators should be selected, and further provided that: ‘The decision of the Arbitrator or Arbitration Board shall be final and binding * * * Any dispute as to whether a grievance arises out of the interpretation or application of the Agreement, shall be subject to the grievance procedure as herein defined and shall be subject to arbitration.’
The general law on the power of the courts in passing on awards made by arbitrators under agreements similar to the one here involved has recently been reviewed at length by this court in Crofoot v. Blair Holdings Corp., 119 Cal.App.2d 156, 260 P.2d 156. The review of the authorities there contained need not be repeated in this opinion. Suffic it to say that, 119 Cal.App.2d at page 186, 260 P.2d at page 172 of that opinion, after discussing many cases, we concluded: ‘Under these cases it must be held that in the absence of some limiting clause in the arbitration agreement, the merits of the award, either on questions of fact or of law, may not be reviewed except as provided in the statute.’ The statute referred to is section 1288 of the Code of Civil Procedure prohibiting the vacation of such awards except in cases ‘where the award was procured by corruption, fraud or undue means', or ‘where there was corruption in the arbitrators,’ or ‘where the arbitrators were guilty of misconduct’ in refusing continuances or in ‘refusing to hear evidence, pertinent and material to the controversy; or of any other misbehaviors, by which the rights of any party have been prejudiced’, or ‘where the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award * * * was not made.’ (See, also, § 1289, Code Civ.Proc. permitting modification of an award in certain limited situations not here involved.)
Of course the arbitration agreement can limit the powers of the arbitrators, but where it does not the courts are prohibited from reviewing the sufficiency of the evidence or the validity of the reasoning of the arbitrators, except as permitted by the statute. Limitations in the arbitration agreement will not be extended by interpretation so as to permit a review of the facts or of the law unless such intent is clearly expressed. In the Crofoot case the arbitration agreement provided that the decision of the arbitrators should be final “as to all facts found” and also provided that the arbitration was to be “mutually conclusive and binding as to all issues * * * save for such rights as the parties * * * may have” under the terms of the arbitration statute. It was held that under such an agreement the award was final and conclusive not only as to the facts but also as to the law, except as provided by statute. Certainly, in the present case the provision that the decision of the arbitrators shall be ‘final and binding’ upon the parties is at least as broad as the provisions that the award shall be final “as to all facts found”, and that it shall be “mutually conclusive and binding as to all issues” found in the Crofoot case.
In the Crofoot case, in discussing the inability of the courts to review questions of law, even where erroneously decided, this court stated, 119 Cal.App.2d at page 189, 260 P.2d at page 174: ‘Even if the arbitrator decided this point incorrectly, he did decide it. The issue was admitted properly before him. Right or wrong the parties have contracted that such a decision should be conclusive. At most, it is an error of law, not reviewable by the courts.’ Various questions of fact, of mixed law and fact, and of pure law are mentioned by the court, and as to each of them the court concludes, 119 Cal.App.2d at page 190, 260 P.2d at page 174: ‘Questions of fact and the sufficiency of the evidence cannot be reviewed by the courts'; or 119 Cal.App.2d at page 190, 260 P.2d at page 174: ‘* * * we must conclusively assume those conclusions are supported’; or 119 Cal.App.2d at page 190, 260 P.2d at page 174: ‘* * * it was an error of mixed law and fact, or of law, and, as such, not reviewable on this appeal’, or some such similar expression. It must therefore be accepted as settled law that except as provided by statute, and, as will be later pointed out, as to the defense of illegality the sufficiency of the evidence to support the findings, mixed questions of law and fact, and pure questions of law contained in an arbitration award under such an agreement as is here involved, cannot and will not be reviewed by the courts.
The Crofoot case is similar to the instant one in another important respect. In that case the arbitrator made a short award completely disposing of the controversy, and supported it by a lengthy opinion setting forth his reasons for making the award, which amounted to detailed findings. In the instant case a similar short award was made, and the two majority arbitrators joined in an opinion giving their reasons for making the award. The dissenting arbitrator filed a detailed dissenting opinion on the facts and on the law. In the Crofoot case, in discussing such an opinion, it was stated, 119 Cal.App.2d at page 190, 260 P.2d at page 174: ‘Although these reasons are not spelled out in the findings, since it is the law that the arbitrator is under no compulsion to explain his award or give reasons for his conclusions, Sapp v. Barenfeld, 34 Cal.2d 515, 212 P.2d 233, we must conclusively assume those conclusions are supported.’ At page 192 of 119 Cal.App.2d at page 175 of 260 P.2d is to be found the following: ‘Obviously, the arbitrator did pass on this issue [an issue not disposed of in the findings or opinion] because he awarded damages to Blair. He was not required to set forth his reasons for doing so. It must be presumed ‘That all matters within * * * a submission to arbitration were laid before the arbitrators and passed upon by them’. § 1963, subd. 18, Code Civ.Proc.'
These rules that customarily give finality to both factual and legal determinations contained in an arbitration award are subject to at least one exception, and that is, the courts will vacate the award if it is found to be based upon an illegal transaction. An application of the rules applicable to this exception is to be found in Loving & Evans v. Blick, 33 Cal.2d 603, 204 P.2d 23. That case involved an arbitration of a disputed sum due under a building contract pursuant to a clause permitting arbitration contained in that contract, and pursuant to a separate agreement to submit the dispute to arbitration. During the course of the arbitration one of the parties presented the special defense that one of the contractor partners was not licensed as required by statute and urged that this illegality invalidated the entire proceedings. The arbitrator made an award to the contractors without specifically passing on the illegality defense. This award was confirmed by the trial court. The Supreme Court reversed. Only three justices approved the reasoning of the majority opinion, one other justice simply concurred ‘in the judgment’ of reversal, and three justices dissented, two dissenting opinions being filed. The basic holding of the majority opinion is disclosed by the following quotation, 33 Cal.2d at page 609, 204 P.2d at page 26: ‘* * * the rules which give finality to the arbitrator's determination of ordinary questions of fact or of law are inapplicable where the issue of illegality of the entire transaction is raised in a proceeding for the enforcement of the arbitrator's award. When so raised, the issue is one for judicial determination upon the evidence presented to the trial court, and any preliminary determination of legality by the arbitrator, whether in the nature of a determination of a pure question of law or a mixed question of fact and law, should not be held to be binding upon the trial court.’ The following quotations from the majority opinion disclose the basis of that opinion, 33 Cal.2d at page 610, 204 P.2d at page 27: ‘It seems clear that the power of the arbitrator to determine the rights of the parties is dependent upon the existence of a valid contract under which such rights might arise’; and again, 33 Cal.2d at page 610, 204 P.2d at page 27: ‘In the absence of a valid contract no such rights can arise and no power can be conferred upon the arbitrator to determine such nonexistent rights'; and again, in discussing the provisions of the arbitration statute, and in quoting with approval from 6 C.J.S., Arbitration and Award, § 12, p. 160, it is stated that “a claim arising out of an illegal transaction is not a proper subject matter for submission to arbitration, and that an award springing out of an illegal contract, which no court can enforce, cannot stand on any higher ground than the contract itself’; and again, 33 Cal.2d at page 611, 204 P.2d at page 28: ‘Since an unlawful transaction cannot be given legal vitality by the arbitration process * * *’; etc. Thus, the majority opinion limits the exception to cases where the contract sought to be arbitrated is itself, illegal.
There should also be mentioned another case, a companion case to the Loving & Evans case, decided the same day, namely, Franklin v. Nat C. Goldstone Agency, 33 Cal.2d 628, 204 P.2d 37. This time four judges concurred in the majority opinion, and three judges dissented. In this case it was held that an order confirming an arbitrator's award in favor of a contractor should be reversed where the petition for confirmation failed to allege affirmatively, and it was not proved that the contractor had been properly licensed. See, also, Pawling v. Malley, 107 Cal.App.2d 652, 237 P.2d 663.
Thus, under the rule of these cases there can be no doubt that a prerequisite of a valid contract is an essential to an operative and valid award. Both cases involved the validity of the very contract authorizing the arbitration. In both cases the underlying contract was invalid because in violation of an express statute. In the present case the validity of the arbitration agreement is not at issue. The theory of appellant is that the arbitrators have found that the employee was a communist, and that to be compelled to reinstate such an employee in a defense plant is against public policy and therefore void.
Before discussing the application, or the possible application, of the rules of these cases to the instant one, a review of the facts should be given.
Cutter Laboratories manufactures vaccines, serums, and other biologicals, for civilians, and, is also under contract to make them for the federal government. The plant is capable of being sabotaged. During the war period the federal government exercised stringent security control over the operations of the plant, and had the right and power, never exercised, to require the discharge of any person who was a bad security risk. Such security control was abandoned at the end of the war, and no such control was exercised during the periods here relevant. Admittedly, no government agency was disturbed about Doris' employment, nor had any such agency recommended her dismissal.
The respondent union was a C.I.O. affiliate. The arbitrators, in their majority opinion, referred to it as a ‘left wing’ organization, and admittedly, in March of 1950, after the occurrences here involved, it was expelled from the C.I.O. The employer, appellant here, had had some labor difficulties with this union before this case arose, but had entered into a collective bargaining agreement with it dated July 23, 1948.
Doris, the discharged employee, had graduated from law school with honors, and had been admitted to the California bar in 1942. She was then employed as an enforcement attorney by the OPA and then went to work for the legal firm of Gladstein, Grossman, Sawyer & Edises, who handle labor cases. She left this employment because, according to her testimony, she became bored with routine legal matters and wanted to gain some practical experience in the labor field. She worked in a cannery for a short time and became an organizer for a tobacco and agricultural workers' union. She went to work for the Cutter Laboratories in October of 1946, after filing with the company an application for employment. This application contained several false statements. It concealed her educational background, failed to disclose that she was an attorney, and falsely represented her employment background. It falsely represented that she had been employed by an attorney as a file clerk. It gave as references the name of an attorney and a dentist who, in their letters of recommendation, at Doris' request, also failed to divulge her legal and work background. Doris' explanation of these misrepresentations is that had she told the truth, Cutter Laboratories would not have hired her.
In all other respects the application was truthful. The application contained no questions about any communist affiliation and no false representations were made as to such beliefs.
When first employed Doris was hired as a label clerk and later as a clerk-typist. She continued in this employment until October 6th of 1949 when she was discharged. During this three-year-period there were no complaints about her work. In the periodic ratings made by her supervisors she was rated as ‘average’ or ‘above average’ upon all of her job qualifications, and ‘below average’ only as to health and absences from employment.
While working for appellant Doris became increasingly active in respondent union, holding various offices, until in the latter part of 1948 she became chief shop steward, whose primary function was to represent the union in grievances arising under the collective bargaining agreement. She represented the union in several controversies with the employer in this capacity. In the spring of 1949 Doris was elected president of respondent union.
During the period of Doris' employment there were some labor difficulties between respondent union and appellant. These arbitrators found that all of these had to do with wage and contract issues, and that there was no evidence of ‘any work stoppage, strike or other interference with production the avowed objective of which was political, philosophical, subersive or revolutionary.’ In April of 1947, at a time when Doris was a union official, the union charged appellant before the National Labor Relations Board with engaging in unfair labor practices. The appellant, during this month, investigated the past employment, character, and communist affiliations of Doris, and became fully aware of her false representations in her employment application and of her background, including communist affiliations, and of most of the other facts that two and a half years later were used as the claimed basis of her discharge. Nothing was done about these facts, however, in April of 1947.
In July of 1949 the collective bargaining agreement between appellant and respondent, pursuant to its terms, was opened for negotiations, resulting in November of 1949 (after the discharge of Doris), in a wage increase for the employees, and in other contract changes relating to labor conditions. Doris, as the then president of the respondent, was one of the union negotiators in this labor dispute. It was in the middle of these negotiations that Doris was discharged. The main question in dispute was a wage increase, the company refusing any increase, and the union demanding a 20-cent an hour increase, which, however, the union offered to compromise. The company refused. Relations between the two contracting parties deteriorated. On October 2, 1949, a radio commentator made a radio talk in which he made an attack on the appellant's labor policies. This incensed the executive vice-president of the appellant. He considered the charges unfair. On October 5, 1949, the union placed paid advertisements in three eastbay newspapers stating the union's position and soliciting the members of the public to telephone the executive vice-president of appellant and tell him what their opinion of the situation was. An acrimonious meeting between three representatives of the union, including Doris, and three representatives of the company, including the executive vice-president, was held on October 5, 1949, to discuss a labor grievance. The attorney for the company was also present, which was unusual. During this meeting the union representatives admitted responsibility for the radio broadcast, which made the employer representatives very angry.
The next day, October 6, 1949, Doris was discharged. This was accomplished by reading to her a letter prepared by appellant, which letter was later that day read to the employees at an employees' meeting called by the appellant. The letter states, as reasons for the discharge, falsifications upon Doris' employment application, and communist affiliations. The falsifications are enumerated as the failure to disclose that she had a law school education, had been admitted to the bar in 1942, had worked two years as an enforcement attorney for the OPA, had been employed by the Gladstein firm, and then went to work in a cannery from which position she had been discharged because she refused to answer at a labor hearing whether she was a communist. This discharge was later upheld by the N.L.R.B. She also gave false information as to her prior employment record, which fact was stated in the letter. The letter stated that, although the company had known of these falsifications and normally would have discharged her, it had been decided not to fire her because the company did not want to be charged with persecuting a union official. The letter then went on to charge that the company had now learned of Doris' communist affiliations; that in October, 1948, at an N.L.R.B. hearing she had refused to answer the question as to whether she was a communist or was a member of any communist controlled group; that the company knew that she was a member of several designated groups that were communist controlled; that the company was convinced now that she was and had been a communist; that in view of the company's need for protection from sabotage it was necessary to now discharge her for the ‘causes mentioned.’ It is undisputed that prior to her discharge Doris was never asked the truth of these charges, nor was she given a chance to answer them.
The union protested the discharge, claiming that the real reason for the discharge was that Doris was active in union affairs, and that this violated the terms of the bargaining agreement. The dispute, under the terms of that agreement, was submitted by both sides, to arbitration.
Section 3 of Article I of the collective bargaining agreement provided: ‘The Company agrees that it will not interfere with, restrain or coerce said employees because of membership or lawful activity in the Union nor will it attempt to discourage membership in the Union by discrimination in respect to hiring, tenure of employment or any other term or condition of employment.’
Article VIII, section 1, in reference to discharges and layoffs provided:
‘No employee shall be discharged except for just cause. The provisions of this section shall not apply to personnel reductions for lack of work or to effect economies.
‘In the event an employee is discharged without just cause, he shall be reinstated without loss of pay, seniority, or other benefit, subject to the following limitations: * * *
‘In case of reinstatement, the total back pay award allowable shall be limited to the full time regular pay of the employee for the period he was off the payroll, or a period of eight (8) weeks, whichever period is the shorter, less any gross earnings or unemployment compensation received or earned during such period.’ (In the remainder of the Article minimization of damages, adjustment for sick leave benefits, a warning requirement, and notice of dismissal are dealt with.)
The agreement then sets forth a grievance procedure which was not here followed by the employer, and for the submission of disputes to arbitration. Admittedly, the issue here submitted to arbitration was whether the company had ‘just cause’ for the discharge of Doris.
The majority of the arbitrators reviewed the evidence at some length and concluded that Doris was ‘unjustly discharged, that the reasons assigned by the Company for the discharge were not the real reasons and had been waived, and that the discharge interfered with, restrained and coerced an employee because of participation as an officer and negotiator on behalf of the Union in a wage negotiation.’
The basic evidence that the company introduced at the hearing about Doris' affiliations dealt primarily with her activities between 1942 and 1947, except her refusal in October of 1948, eleven months before her discharge, to answer questions at the N.L.R.B. hearing. This evidence certainly would support a finding that Doris was affiliated, in these periods, with communist front organizations and was a communist. At the hearing before the arbitrators Doris was asked if she had ever been a member of the communist party. She refused to answer, her counsel objected, and the objection was overruled by the arbitrators. Counsel for Doris then offered to stipulate that the company, upon the evidence before it, at the time of discharge, in good faith believed that Doris was a communist. The stipulation was refused by the company. The board then told the witness that she would not be instructed to answer the question but that the board would draw ‘all justifiable inferences' from such refusal. Doris refused to answer on the ground that such question unjustifiably invaded her private beliefs. She also, on the same grounds, refused to answer a series of questions dealing with her alleged membership in related communist groups, with certain associations, or as to the authenticity of certain documents presented to her.
It should be here mentioned that the arbitrators extended to the company a similar immunity from cross-examination as to the sources of much of its information, with the same caveat as to adverse inferences.
The arbitrators in their award found that the company knew the basic facts about Doris, including her falsification of her employment application and of her communist affiliations, as a result of its investigations in April of 1947; that, in fact, the company officials believed that she was a communist within six months after she was hired; that the company was indifferent to such facts; that the company knew, or should have known, of all the facts relied upon in October of 1949 for the discharge in 1947 and not later than October of 1948; that the arbitration board was not the forum in which to decide the company's responsibilities toward national defense; that the company had no right of discharge beyond its collective bargaining agreement; that the issue was whether ‘just cause’ existed for the discharge.
The following finding should be quoted:
‘The Company maintains that the basis for the discharge was two-fold: the omissions and falsifications in the Application for Employment and membership in the Communist Party with the full implications of dedication to sabotage, force, violence and the like, which Party membership is believed to entail.
‘That the Company honestly believed all of these things is admitted and the accuracy of those beliefs is established in the record as follows: by admission with respect to the omissions and falsifications in the Application for Employment; by undenied and uncontradicted evidence with respect to the membership in the Communist Party; and by uncontradicted evidence that the Company's beliefs about the full implications of Party membership were prevalently understood and shared.
‘In this view of the record, and we take this view, we are unable to find that the Company has been denied a fair hearing by reason of our refusal to instruct Doris Walker to answer the questions put to her touching this issue. Assuming that her answers would have been favorable to the Company's position, they would serve no more than to corroborate what we find is already established by the record; and the Company offers no convicing reason why further corroboration is necessary. The Company's motions are accordingly denied.’
The board then stated that even though an employer may once have had just cause for a discharge, such cause may be lost by unreasonable delay, and that, in view of the collective bargaining agreement, the issue still remained as to whether the grounds asserted were the real causes for the discharge. The board found, on the evidence, that after the company acquired knowledge of the main facts upon which it now relies in April of 1947, it evidenced no concern over those facts, and made no further investigation until 1949; that there was no reasonable excuse offered by the company for this delay in asserting the grounds for discharge now asserted; that general principles of policy require that labor disputes and grievances be quickly settled; that under the collective bargaining agreement here involved the ‘employer should not be entitled to carry mutually known grounds for discharge in his hip pocket indefinitely for future convenient use’; that the grounds ‘asserted by the Company for the discharge were stale.’
The arbitrators then went on to find that, in fact, the discharge in the middle of labor negotiations was retaliatory in nature and designed to ‘restrain, coerce or interfere with the employee because of lawful Union activity,’ and that the assigned reasons were not the real reasons, and had been waived.
Appellant first attempts to bring itself within the literal terms of section 1288 of the Code of Civil Procedure, which is the section prescribing the situations in which the courts may vacate an arbitration award. The section provides, so far as pertinent here, that an award may be vacated where it is ‘procured by corruption, fraud or undue means', or where the arbitrators were guilty of misconduct in ‘refusing to hear evidence, pertinent and material to the controversy; or of any other misbehaviors, by which the rights of any party have been prejudiced’, or ‘where the arbitrators exceeded their powers'. It is contended that the basic issue was whether Doris was a communist; that when the arbitrators refused to order her to answer questions about her communist affiliations they prevented appellant from proving its case, and deprived it of a fair hearing in violation of the above sections. The answer to these contentions is obvious. The board told the witness that if she did not answer the questions it might indulge in adverse inferences. Then the board not only found that appellant, in good faith, at the time of discharge, believed that Doris was a communist, but found that Doris was in fact a communist. Obviously, the answers to these questions, assuming that they would have supported appellant, could have proved no more than the board actually found to be true. Thus, as held by the board, the evidence not required to be produced would have been merely cumulative. The board's refusal to compel an answer in no way adversely affected appellant, nor could it have deprived it of a full and fair hearing. Clearly, none of the statutory grounds set forth in section 1288 of the Code of Civil Procedure for vacating an award exist.
Appellant's main contention is that regardless of statute the award here was ‘illegal’ in the same sense that that term was used in Loving & Evans v. Blick, 33 Cal.2d 603, 204 P.2d 23, and Franklin v. Nat C. Goldstone Agency, 33 Cal.2d 628, 204 P.2d 37, discussed, supra. It is urged that to order the reinstatement of a dedicated communist, who had infiltrated herself into a defense plant by false representations, is against public policy, and is therefore illegal and void.
So far as the misrepresentations in the employment application are concerned, the finding that such cause for discharge had been waived is here conclusive. Certainly such misrepresentations would be just cause for a discharge if seasonably urged. But here the employer knew of such misrepresentations in April of 1947. It did not then discharge the employee, nor even question her about the false statements. It sat back for two and a half years, waited until the employee had become president of the union, waited until the company and the union were in the middle of labor negotiations with the employee as one of the chief union negotiators, and then discharged her, using the falsifications as an excuse, at a time when such discharge would be most injurious to the lawful activities of the union. As stated by the arbitrators, an employer cannot sit on a known cause for discharge and do nothing about it for two and a half years and then use this cause with the intent and for the purpose of injuring the union in its lawful labor activity. The finding of waiver is now conclusive.
Appellant, in an attempt to establish its public policy argument, builds up a most emotional picture about what might happen if a communist were ordered reinstated in a defense plant. It is interesting to note in this regard that, as pointed out by the arbitrators, no federal or state agency has expressed any alarm at such possibility. During the war period the federal government insisted on security measures, such as the right to insist upon the discharge of any person deemed a bad security risk. Upon the termination of hostilities such security restrictions were removed. The period here involved was after the termination of hostilities and before the commencement of the Korean conflict. No federal agency complained about the employment of Doris, or at any time suggested that she be discharged. Although the evils of communism were well known long before 1947, neither the defense agencies of the government nor appellant saw fit to screen applicants for employment on the basis of their possible communist affiliations. The application for employment form prepared by appellant and signed by Doris contained no questions about the possible communist affiliations of the prospective employee. It was not until after the award here involved was rendered that such questions were added to the form. It must be remembered that appellant knew of Doris' affiliations at least as early as April of 1947. Admittedly, thereafter and up until her discharge in October of 1949, appellant made no effort to restrict her activities, nor did it take any security measures of any kind. Admittedly, her work during this entire period was entirely satisfactory to appellant, and admittedly, during this period, she committed no unlawful act against the appellant. Appellant did not consider her a menace until she became a negotiator for the union in a legitimate labor dispute. If the reinstatement of Doris as an employee is attended with the terrible possibilities now pictured by appellant, such possibilities have existed since 1947. If appellant is correct now in its attitude, it has been a willing and active participant in undermining the national defense by keeping Doris in its employ.
The precise limits of the power of a court to vacate an arbitration award on the ground of illegality have not been definitely fixed by the courts. Three members of the Supreme Court, by their dissents in the Loving & Evans, and the Goldstone cases, are definitely of the opinion that legality is simply one of the issues before the arbitrators, and that their decision on that issue, as on other issues, is not subject to review, except as provided by statute. Three justices, with a fourth concurring ‘in the judgment’ are of the opinion that the courts may and should vacate on the ground of illegality, at least in certain situations. But, assuming as we do that the majority opinions in those two cases properly state the law, all that was decided by those opinions was that when the underlying contract out of which the dispute sought to be arbitrated is illegal because in violation of a statute the courts have the power and duty to vacate. Here, of course, the collective bargaining contract, which is the contract forming the basis of the arbitration, is perfectly legal. The asserted illegality is not predicated on any term of that contract, nor does it arise out of the terms of that contract, but is based on facts developed at the hearing before the arbitrators. It is argued by respondent, with some merit, that where the claimed illegality thus appears it is merely another factual issue and that the finding of legality by the arbitrators like other factual findings is not subject to review.
It should also be mentioned that the illegality involved in the two cited cases consisted of the violation of a statute. Here the asserted illegality lies in the vague and uncertain field of a requested court declared public policy. While there can be no doubt that, in a proper case, in the absence of statute, courts possess the power to declare contracts, transactions and activities of individuals, associations and corporations to be illegal because in violation of public policy, Safeway Stores v. Retail Clerks etc. Ass'n, 41 Cal.2d 567, 261 P.2d 721, such public policy is such a vague and uncertain thing that the power should be exercised with restraint and only in the very clearest of cases. Maryland Casualty Co. v. Fidelity & Casualty Co., 71 Cal.App. 492, 497, 236 P. 210; Smith v. San Francisco & N. P. Ry. Co., 115 Cal. 584, 600, 47 P. 582, 35 L.R.A. 309; Southern Pacific R. Co. v. Stibbens, 103 Cal.App. 664, 680, 285 P. 374. As was said in National Auto. Ins. Co. v. Winter, 58 Cal.App.2d 11, at page 22, 136 P.2d 22, at page 28: “It has been well said that public policy is an unruly horse, astride of which you are carried into unknown and uncertain paths.”
It must also be remembered that neither the federal nor state governments has seen fit to declare by statute that membership in the communist party is a crime. While the Smith Act, 18 U.S.C.A. § 2385, does make the knowing advocacy of the forceful overthrow of government a crime, the later Internal Security Act of 1950, 50 U.S.C.A. § 783(f), expressly provides that ‘Neither the holding of office nor membership in any Communist organization by any person shall constitute per se a violation of * * * any * * * criminal statute.’ See Dennis v. United States, 341 U.S. 494, 71 S.Ct. 857, 95 L.Ed. 1137; Communist Party of United States of America v. Peek, 20 Cal.2d 536, 127 P.2d 889.
It must also be remembered that there is also a strong public policy, evidenced by statutes, operating in favor of respondent union and somewhat contrary to the uncertain public policy asserted by appellant. There is first a strong public policy in favor of arbitration, of settling arbitrations, particularly labor arbitrations, speedily and with a minimum of court interference, and of making the awards of arbitrators final and conclusive. This public policy is expressed in our arbitration statutes, §§ 1280–1293 of the Code of Civ.Proc. There is also a strong public policy expressed in the National Labor Relations Act, § 151 et seq., 29 U.S.C.A., and in section 923 of the Labor Code of California in favor of worker organization and against employer interference and coercion.
These comments indicate the difficulty that exists in holding that it is clearly against public policy for an employer to be compelled to reinstate in a plant where some defense work is performed, a communist employee who is a mere label clerk or clerk-typist and who admittedly has never, during her employment, committed any act of saborage or unlawfully injured the employer. We are not required to decide that question in this opinion. In the instant case the arbitrators have found that membership in the communist party was not the real reason for the discharge, but that the real reason for the discharge was to interfere with the lawful labor activities of the union. The arbitrators also found that this was a direct violation of the collective bargaining agreement. Thus the appellant, who it has been found has unlawfully violated its contract and the public policy announced in section 923 of the Labor Code, seeks to support its unlawful action by asserting tht the employee was a communist, which was one of the reasons set forth in the letter of discharge, but which, it has been found, was not the real reason at all. Certainly it is implicit in the collective bargaining agreement that the ‘just cause’ for the discharge must be not only stated to the employee, but the stated reason must be the real reason for the discharge. Where, as here, the real reason for the discharge was an attempt to interfere unlawfully with the union, the employer cannot be permitted to so interfere with the union by asserting a reason that was not asserted in good faith and did not, in fact, motivate the employer in making the discharge. What was the real reason for the discharge was obviously a question of fact for the arbitrators, and their finding on this issue is binding and conclusive on the courts.
In addition, everything said in this opinion about the waiver of the ground of falsifications in the employment application is also applicable to the present issue. Appellant knew of the employee's communist affiliations for two and a half years before it attempted to use such affiliations as an excuse for the discharge. It would be contrary to public policy, as evidenced by the statutes already mentioned, and contrary to the letter and spirit of the collective bargaining agreement, if the employer were to be permitted to sit on a known assumed cause for discharge and then assert it for the purpose of interfering unlawfully with a lawful labor activity of the union. It must be remembered that it is the union, not Doris, that is the respondent here, and it is the union's rights that were adversely and unlawfully affected by the discharge. It must be held that the finding of waiver is a finding on a question of fact, and the arbitrators' finding, for reasons already stated, is conclusive.
The order and judgment appealed from are affirmed.
PETERS, Presiding Justice.
BRAY and FRED B. WOOD, JJ., concur.